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Multiple Hurdle Waterfall Calculator
Multi-tier waterfalls align GP incentives with exceptional performance.
GP blended promote %
0.07%
Total distribution
$80,454,287
LP final return
$75,121,993
How the math works
Each tier contributes its split to GP promote. Total blended promote % reflects tier mix.
15% IRR on $40M over 5 yr = $80.5M dist. Multi-tier → $11M GP promote = 13.7% effective blended promote.
How to Use
- Enter LP capital.
- Enter tier 1 pref + split.
- Enter tier 2 threshold + split.
- Enter tier 3 threshold + split.
- Enter total distribution.
- Read LP and GP distributions.
Frequently Asked Questions
Multi-tier logic?
Tier 1 (0-8%): 100% LP. Tier 2 (8-12%): 80/20 LP/GP. Tier 3 (12-18%): 70/30. Tier 4 (>18%): 60/40. Escalating promote rewards GP for exceptional outperformance while protecting LP in normal scenarios.
IRR vs MOIC hurdles?
IRR hurdle: time-weighted, harder to hit in long hold. MOIC hurdle: simpler, time-insensitive. Hybrid: meet IRR AND MOIC (conservative for LP). Each has gaming risk; use both for LP protection.
Design tradeoffs?
More tiers = more LP-friendly at high returns but more complex. 2-tier structures most common. 3-tier institutional. 4+ tier rare outside mega-funds. Balance simplicity vs sophistication.
How often should I rerun this?
Rerun this calculator whenever inputs change materially — new rent roll data, rate moves, loan balance updates, or quarterly operating data. For active deals, monthly refresh is typical. For stabilized assets under monitoring, quarterly is fine. Treat the output as a decision tool, not a one-time answer — market conditions evolve and so should your analysis.
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