Interactive Lab

Equity Waterfall Simulator

Build a capital stack, set a preferred return and a two-tier promote, and see how profit splits between LP and GP by exit.

Total Equity$10,000,000

LP Equity Share90%

Preferred Return8%

Hold Period5 yrs

Annual Cash Flow (each year of hold)$400,000

Exit / Sale Proceeds (final year)$13,000,000

Tier 1 GP Split20%

Tier 1 IRR Hurdle12%

Tier 2 GP Split30%

LP IRR

8.8%

GP IRR

10.9%

LP Equity Multiple

1.49x

$9,000,000 invested

GP Equity Multiple

1.63x

$1,000,000 invested

Total Distributions

LP: $13,368,000GP: $1,632,000

Distributions by year

Year	Cash Available	To LP	To GP
1	$400,000	$360,000	$40,000
2	$400,000	$360,000	$40,000
3	$400,000	$360,000	$40,000
4	$400,000	$360,000	$40,000
5 (exit)	$13,400,000	$11,928,000	$1,472,000

Waterfall order: return of capital → 8% preferred return → 20/80 GP/LP split up to a 12% LP IRR → 30/70 GP/LP split on everything above that.

Learn the concept behind this tool