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LP Capital Call & Distribution
Waterfall
Tool 16 · Ch. 30–32 · European waterfall · carry · hurdle · GP catch-up · clawback
Fund Structure
Fund Size ($M)
Fund Life (years)
GP Commit (% of fund)
Waterfall Terms
Hurdle Rate (%)
GP Catch-up (%)
Carried Interest (%)
Performance
Total Capital Called ($M)
Total Gross Distributions ($M)
LP View
LP Commitment ($M)
Run Waterfall
Waterfall Layers
Layer
LP Receives
GP Receives
Remaining Pool
Waterfall Mechanics — European Model (Whole-Fund)
Layer 1 – Return of Capital:
100% of proceeds go to LPs (and GP pro-rata) until all invested capital is returned.
Layer 2 – Preferred Return:
LPs receive the hurdle rate (typically 8% compounded annually) on contributed capital before any carry is paid.
Layer 3 – GP Catch-up:
GP receives 100% of distributions (or per catch-up %) until GP has received carry% of total profits above hurdle.
Layer 4 – Carried Interest Split:
Remaining profits split (e.g. 80/20) between LPs and GP indefinitely.
American Waterfall:
Deal-by-deal carry paid on winners; requires clawback if losers reduce aggregate carry entitlement.
Clawback:
GP must return excess carry received if total fund carry exceeds entitlement at end of fund life.
GP Commit:
LPs expect 1–3% to align GP incentives. Below 1% triggers LP advisory board scrutiny.