Promote Catch Up Gap Calculator

Catch-up tier distributes 100% to GP until parity.

LP pref accrued

GP catch-up ratio (GP/LP)

After-pref distributable

Promote % post-catch-up

GP catch-up

$750,000

LP share during catch-up

$750,000

Catch-up gap (if not full)

How the math works

Target catch-up = LP pref × promote / (1 − promote). GP catch-up = min(distributable × ratio, target).

$3M × 20% / 80% = $750k target. $1.5M × 100% = $1.5M (full catch-up). Catch-up = $750k; LP remainder $750k.

How to Use

Enter LP pref accrued.
Enter GP catch-up ratio.
Enter after-pref distributable.
Read GP catch-up and LP/GP split.

Frequently Asked Questions

Catch-up mechanics?

After LP gets pref, GP gets 100% of distributions until GP has received catch-up amount. Goal: equalize GP and LP effective returns up to pref level. Typical: GP catches up at 50/50 split until parity.

Economics?

Without catch-up: GP only gets promote above pref. With catch-up: GP gets some return even at low deal performance. Splits risk more evenly. Institutional LPs sometimes resist catch-ups; HNW LPs often accept.

Typical structures?

GP catch-up from pref until equal to pref (full catch-up). Or: 50% catch-up (GP and LP both receive until GP has 50% of pref). Or: no catch-up (promote only above pref). Each creates different LP/GP alignment.

When does a lender negotiate vs foreclose?

Lenders calculate their net recovery from foreclosure (asset value minus legal, time, and sale costs) and compare to any workout proposal. If your offer nets the lender more than foreclosure, and you present it with clear sources of capital, most lenders will engage. Bring a credible sponsor, documented sources, and a timeline — vague asks get declined. Build the relationship before distress, not after.