Catch-Up & Clawback

Calculates a GP catch-up from the preferred return already paid and a clawback that trues up deal-by-deal promote against whole-fund results. Inputs are the pref paid and the GP’s target promote share on one side, and per-deal profits and losses, the promote rate, and promote already collected on the other.

Interactive Tool

Catch-Up & Clawback

GP catch-up

Preferred return paid to LPs

GP target promote share

Clawback (deal-by-deal true-up)

Deal A profit

Deal B loss

Promote rate

Promote already collected

Your turn

Work out the GP catch-up on the first deal and the clawback the GP owes back once the fund is trued up.

Catch-up. The LPs have been paid $800,000 of preferred return. The partnership agreement gives the GP a 20% promote and includes a full catch-up tier, so once the pref is paid the GP receives cash until it holds 20% of all profit distributed above returned capital.

Clawback. The same sponsor took promote deal by deal. Deal A made $5,000,000, Deal B lost $3,000,000, the promote rate is 20%, and the GP has already collected $1,000,000. The fund is measured on whole-fund results.

GP catch-up

The cash paid into the catch-up tier, not the profit that funds it. Within $5,000 counts as correct.

Clawback owed by the GP

Enter 0 if nothing has to be returned. Within $10,000 counts as correct.

Learn the concept

This calculator comes from the free Real Estate Finance course, where the concept is taught with readings, worked examples, and practice questions.

Open Real Estate Finance

Built by Devon Coombs, CPA, MBA, Teaching Professor of Finance at Santa Clara University.