Waterfall Split Calculator

Waterfall splits depend on whether the pref tier is paid. In pref tier: pure pro-rata. In promote tier: GP takes their pro-rata share PLUS a promote on the LP's share. This calculator shows both and isolates the GP promote premium above pro-rata.

Distribution amount

LP equity %

GP promote % (above pref)

Pref already paid

LP distribution

$720,000

GP distribution

$280,000

GP promote (above pro-rata)

$180,000

How the math works

Waterfall split rules depend on the tier. In the pref tier, splits are pure pro-rata to invested equity. In the promote tier (above pref), the GP gets their pro-rata share PLUS promote on the LP share — which is the source of outsized GP returns on value-add deals.

Example: LP has 90% equity, GP has 10%. In pref tier, 1M distribution splits 900K/100K. In promote tier with 20% promote, GP takes 10% pro-rata ($100K) + 20% of LP's 90% ($180K) = $280K; LP takes $720K.

How to Use

Enter the distribution amount.
Enter LP equity percentage and GP promote percentage.
Select whether pref is already paid.
Read LP and GP shares plus GP promote.

Frequently Asked Questions

Is GP promote a cost to LP?

Yes. Promote flows from LP's share — that's why it's meaningful. On $1M distribution with 90% LP equity and 20% promote, LP's 'natural' $900K becomes $720K after promote. GP's $100K becomes $280K.

How many tiers?

Simple deals: 2 tiers (pref + above). Standard: 3 tiers (pref, 20/80 to target IRR, 30/70 above). Complex: 4+ tiers tied to specific IRR hurdles. Each tier has its own split math.

American vs European waterfall?

European: pref + capital returned first, then promote on any profit after. American (deal-by-deal): each deal runs its own waterfall; promote on early winners can be clawed back if later deals underperform.