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Equity Waterfall & Promote Calculator

Type in the blue cells on the left. The cascade on the right is the order the money moves in.

THE EQUITY
THE HOLD AND THE EXIT
THE PREFERRED RETURN
THE PROMOTE
LEVERAGE AT ORIGINATION (OPTIONAL)

THE EXIT MATH

Selling costs at exit
Net sale proceeds after loan payoff
TOTAL CASH TO DISTRIBUTE
Total equity in the deal
Profit above returned capital
LP share of the equity

WHAT ACCRUES BEFORE ANYTHING SPLITS

Pref earned over the whole hold
Preferred return accrued to the LP
Preferred return accrued to sponsor co-invest
Total preferred return owed
LP share of that pref
Cash the catch-up tier needs
LP dollars that equal hurdle 1
LP dollars that equal hurdle 2

TIER 1 — RETURN OF CAPITAL

Cash into this tier
to the LP
to the sponsor
Cash still unallocated
LP IRR if the money stopped here

TIER 2 — PREFERRED RETURN

Cash into this tier
to the LP
to the sponsor, on its own capital
Cash still unallocated
LP IRR if the money stopped here

TIER 3 — SPONSOR CATCH-UP

Cash into this tier
to the sponsor — the first promote dollars
to the LP
Cash still unallocated
LP IRR if the money stopped here

TIER 4 — SPLIT UP TO HURDLE 1

Cash into this tier
to the sponsor — promote
to the LP
Cash still unallocated
LP IRR if the money stopped here

TIER 5 — SPLIT UP TO HURDLE 2

Cash into this tier
to the sponsor — promote
to the LP
Cash still unallocated
LP IRR if the money stopped here

TIER 6 — EVERYTHING ABOVE HURDLE 2

Cash into this tier
to the sponsor — promote
to the LP
Cash still unallocated

THE ANSWER

LP TOTAL DOLLARS BACK
LP equity multiple
LP IRR
SPONSOR TOTAL DOLLARS BACK
Of which promote, above capital and pref
Sponsor equity multiple on its co-invest
Sponsor IRR on its co-invest
Sponsor's share of the total profit
Check: the tiers add up to the cash (must be 0)

LEVERAGE CHECK

Loan-to-value at origination
Room left to the 85% supervisory limit

Exit Scenarios

Type sale prices in the blue column. Every other column uses the terms and hold period from THE WATERFALL tab.

Gross sale priceCash to distributeTier 1 return of capitalTier 2 preferred returnTier 3 catch-upTier 4 to hurdle 1Tier 5 to hurdle 2Tier 6 residualLP dollarsSponsor dollarsLP IRRLP multipleSponsor promoteSponsor % of profitWhat this scenario assumes
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

Where that leaves you

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Equity Waterfall & Promote Calculator — the full workbook

Same formulas as this calculator, plus the tabs, the charts and a 12-month history that this page cannot hold. Google Sheets and Excel. One purchase, no subscription.

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Educational estimates only. These calculators and workbooks do the arithmetic on the figures you enter; they are general-purpose tools, not financial, investment, tax, legal, lending, insurance or construction advice, and no result is a quote, an offer, or a guarantee of any outcome. Results depend entirely on your inputs and assumptions. Verify anything you intend to rely on with a licensed professional — a CPA, attorney, lender, licensed contractor, or your own agent. WorkbookBarn and Marcos Gil accept no liability for decisions made using these tools. Marcos Gil is a licensed Kentucky real estate agent (License No. 296259) and is not a lender, CPA or attorney.

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