Promote Catch Up Calculator

Promote catch-ups accelerate sponsor share. This calculator runs the math.

LP equity

Preferred %

Hold years

Target sponsor share %

Catch-up to sponsor %

Catch-up dollars needed

$1,714,286

Preferred accrual

$4,000,000

Target sponsor $

$1,714,286

How the math works

Preferred = equity × rate × years. Target sponsor $ = pref × target share ÷ (1 − target share). Catch-up needed = target ÷ catch-up speed.

LPs should model catch-up separately from promote. Most offering documents describe catch-up in dense language; translating to dollar impact across plausible exit scenarios reveals sponsor upside skew that the headline promote number hides.

How to Use

Enter LP equity.
Enter preferred return %.
Enter hold years.
Enter catch-up split (to sponsor).
Enter target post-catch-up split.
Read catch-up dollars needed.

Frequently Asked Questions

Catch-up mechanics?

LPs get pref (8% typical) first. Then sponsor gets 100% of next dollars until sponsor's cumulative take = target share of total profit. Then LP/sponsor split at promote (70/30 or 80/20 typical) thereafter.

Why catch-up?

Allows sponsor to earn full target share across entire profit pool, not just the portion above pref. Without catch-up, sponsor always behind; with catch-up, math equals out by final split.

Alternatives?

No catch-up: LP/sponsor split starts at promote immediately above pref. Catch-up rate varies (50/50, 80/20, 100/0 to sponsor until catch-up complete). Each moves sponsor acceleration speed.

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.