Waterfall question

  • Lizzie Boyer
    Keymaster
    7 years, 9 months ago #2594

    My main goal is to find out how to use the model for a two tier equity structure with:

    Tier 1 – Pref for Developer and LP split pro rata and distributed prior to equity return distributions non-cumulative

    Tier 2 – 50/50 promote on all profits after pref/equity distributions

    Do I need to change model or can I simply manipulate how I input data into irr hurdle / promote input section?

    Spencer Burton
    Keymaster
    7 years, 9 months ago #3076

    1) The model works for structures from one to four hurdles (inclusive of the preferred return). So a two tier structure is no problem and wouldn’t require any special change. Just set unused tiers (3 and 4) to an unattainable level (e.g. 999%)

    2) Equity return contributions are cumulative but you could manually manipulate the model to make it non-cumulative

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