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Category Finance & Calculations

Fund Size ($)

Multiple on Invested Capital (MOIC) Total fund return multiple (1.0x = breakeven)

Preferred Return / Hurdle Rate (%)

Carried Interest (%)

GP Catch-up Rate (%) 100% = full catch-up; 0% = no catch-up tier

GP Co-Investment (%)

Fund Duration (Years)

Waterfall Structure

Whole-fund waterfall. Carry calculated after all capital + hurdle returned.

Deal-by-deal waterfall. Carry on each profitable exit. Clawback risk applies.

Enter fund parameters and click Calculate

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About

Carried interest is the performance-based compensation allocated to a fund's general partner, typically 20% of profits exceeding a preferred return threshold (hurdle rate). Miscalculating the waterfall distribution exposes GPs to clawback liability and LPs to overpayment risk. The difference between European (whole-fund) and American (deal-by-deal) waterfall structures can shift millions in carry timing. This calculator implements the full four-tier distribution waterfall: return of capital, preferred return at rate r, GP catch-up, and carried interest split. It assumes compound accrual on the hurdle and models catch-up at a configurable rate. Results approximate net distributions assuming no recycling, no management fee offsets against carry, and a single liquidation event.

Formulas

The distribution waterfall determines the order in which fund proceeds are allocated. The four-tier European waterfall operates as follows:

Tier 1 - Return of Capital: LPs receive back their total contributed capital C.

Tier 2 - Preferred Return (Hurdle):

Hurdle = C × ((1 + r)ⁿ − 1)

where r = annual preferred return rate and n = fund duration in years.

Tier 3 - GP Catch-up:

Catch-up = carry%1 − carry% × Hurdle × catch-up rate

At 100% catch-up, the GP receives all distributions in this tier until their share equals carry% of total profits.

Tier 4 - Carried Interest Split:

Remaining profits split: carry% to GP, (1 − carry%) to LPs.

Total GP Carry:

Carried Interest = Catch-up + carry% × Remaining Profit

Where C = total committed capital, r = preferred return (hurdle rate), n = fund life in years, carry% = carried interest percentage (typically 20%). Total proceeds equal C × MOIC, where MOIC is the multiple on invested capital. The GP also receives distributions proportional to their co-investment commitment alongside LPs across all tiers.

Reference Data

Fund Type	Typical Carry	Hurdle Rate	Catch-up	Waterfall	GP Commit	Fund Life
Buyout (Large)	20%	8%	100%	European	1 - 5%	10 - 12 yr
Buyout (Mid-Market)	20%	8%	80 - 100%	European	2 - 5%	10 yr
Venture Capital	20 - 30%	0 - 8%	Varies	American	1 - 2%	10 - 12 yr
Growth Equity	20%	8%	100%	European	2 - 5%	7 - 10 yr
Real Estate (Core)	10 - 15%	6 - 9%	50 - 100%	European	5 - 10%	7 - 10 yr
Real Estate (Opportunistic)	20%	8 - 12%	100%	European	5 - 20%	5 - 7 yr
Infrastructure	10 - 20%	7 - 10%	80 - 100%	European	2 - 5%	12 - 15 yr
Distressed Debt	20%	5 - 8%	100%	European	2 - 5%	5 - 7 yr
Mezzanine	15 - 20%	6 - 8%	100%	European	2 - 5%	5 - 7 yr
Secondaries	10 - 15%	6 - 8%	100%	European	2 - 5%	10 - 12 yr
Hedge Fund (2/20)	20%	High-Water Mark	N/A	Per-Period	10 - 25%	Open-ended
Co-Investment	0 - 10%	0 - 8%	Varies	European	Varies	Deal-specific
Fund of Funds	5 - 10%	6 - 8%	100%	European	1 - 3%	12 - 14 yr

Frequently Asked Questions

A 100% catch-up means the GP receives all distributions after LP preferred return until the GP has earned their carry percentage of total profits. An 80% catch-up means the GP receives 80% and LPs receive 20% during this tier, extending the catch-up period. Lower catch-up rates reduce GP front-loading but increase the total distributed in Tier 3 before reaching the standard carry split in Tier 4.

European (whole-fund) waterfalls calculate carry only after all invested capital plus the preferred return is returned to LPs across the entire fund. American (deal-by-deal) waterfalls allow GPs to collect carry on profitable deals before the full fund has been liquidated. American structures create clawback risk: if later deals underperform, the GP may owe previously collected carry back to LPs. This calculator estimates potential clawback as the difference between American and European carry amounts.

The GP co-investment (typically 1-5% of fund size) entitles the GP to their pro-rata share of all distributions as an LP, in addition to carried interest. A GP committing 2% to a $500M fund invests $10M and receives 2% of all LP distributions (return of capital, preferred return, and LP profit share) plus their carry. This dual income stream is modeled separately in the calculator output.

No. This calculator assumes 100% of committed capital is invested. In practice, management fees (typically 1.5-2% annually on committed or invested capital) reduce the amount available for deployment. A $500M fund charging 2% over 10 years may only deploy ~$400M. For precise modeling, reduce your fund size input by estimated total management fees before calculating.

A MOIC below 1.0x means the fund lost money. Total proceeds are less than committed capital. No preferred return is earned, no catch-up occurs, and no carried interest is generated. LPs receive only partial return of capital. The GP receives their pro-rata share of distributions based on their co-investment percentage, sharing in the loss proportionally.

This calculator compounds the preferred return annually. Semi-annual or quarterly compounding would yield a slightly higher hurdle amount, reducing the profit available for carry. For example, an 8% hurdle on $100M over 5 years compounds to $46.93M annually versus $48.02M quarterly. The difference is typically modest but can shift carry by hundreds of thousands on large funds.