Deal Inputs
Tiered Hurdles (by LP Equity Multiple)
Distributions after preferred return and return of capital are shared by tier until the next LP equity multiple threshold is reached.
| Threshold LP EM | LP Share % | Sponsor Share % | |
|---|---|---|---|
Distribution Schedule
| Period | Distributable Cash ($) | Notes |
|---|
Results
| Period | Distributable Cash | LP Pref Paid | LP Return of Capital | LP Promote | Sponsor Promote | LP Total | Sponsor Total | LP Cumulative | LP EM |
|---|---|---|---|---|---|---|---|---|---|
| Totals |
Example Data (Reference)
| Period | Distributable Cash ($) | Why |
|---|---|---|
| Year 1 | 120000 | Operating cash flow |
| Year 2 | 140000 | Operating cash flow |
| Year 3 | 160000 | Operating cash flow |
| Year 4 | 180000 | Operating cash flow |
| Year 5 | 1600000 | Sale proceeds and final operations |
Click “Load Example” above to inject a similar schedule into the calculator.
Formulas Used
- Preferred Return Accrual: Each period, unpaid preferred return grows by
pref_rate × outstanding LP capital. If “compound” is on, prior unpaid amounts also accrue. - Distribution Order: (1) Pay accrued preferred return to LP; (2) Return of LP capital; (3) Split remaining by tiered hurdles.
- Tier Mechanics (by LP Equity Multiple): For a tier with LP share
sand thresholdEM*, we allocate until LP’s cumulative distributions reachEM* × LP_Equity. The total cash required to advance LP byΔLPinside that tier isΔTotal = ΔLP / s. - Equity Multiple:
LP_EM = (LP_cumulative_distributions) / (LP_equity). If enabled, preferred return is included in the numerator.
This calculator models a common whole-of-deal waterfall. IRR-based hurdles and alternate priority orders can be adapted in code if needed.
How to Use
- Enter LP and sponsor equity and set the preferred return.
- Choose period count and click Build Period Table, then enter distributable cash per period.
- Configure tier thresholds (LP equity multiple) and split percentages.
- Click Calculate to see tables and charts. Use Export CSV or Export PDF.
- Use Load Example to prefill a sample schedule.
Validate assumptions with your legal and partnership documents. This tool is for planning and review.
FAQs
1) What is a preferred return?
It is a priority yield on LP capital that accrues each period until paid before promote splits are applied.
2) Does preferred return compound?
If the checkbox is on, any unpaid amount accrues at the same rate in subsequent periods.
3) Why use LP equity multiple for tiers?
It is a simple yet powerful hurdle that many deals reference; tiers advance as LP cumulative distributions grow relative to LP equity.
4) Where does sponsor capital matter?
It is displayed for context; the promote split allocates remaining cash irrespective of sponsor’s contributed capital unless you customize logic.
5) Can I use IRR-based hurdles?
Yes with customization; you can replace the multiple-based tier logic with IRR checks per period or cumulative cash flows.
6) Why is my last tier set to 999?
That acts like an infinite threshold so all remaining cash splits by the last-row percentages.