Free calculator · Fund Economics
The Distribution Waterfall, LP vs GP
Runs fund proceeds through the four-tier distribution waterfall, return of capital, preferred return, GP catch-up, then the carry split. Inputs are committed capital, total returned, the preferred-return hurdle, and the carried interest rate.
By Devon Coombs, CPA, MBA · Teaching Professor of Finance, Santa Clara University · Reviewed August 2026
From the author: Devon Coombs, CPA, MBA teaches finance at Santa Clara University and works with corporate teams on practical AI.
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The Distribution Waterfall, LP vs GP
LPs receive
$260M
capital + profit share
GP carry
$40M
20% of $200M profit
1 · Capital
$100M
to LPs
2 · Preferred
$20M
hurdle to LPs
3 · Catch-up
$5M
to GP
4 · Split
$175M
80 / 20
Capital returns first, then the preferred return, then the GP catch-up, then the 80/20 split. With a full catch-up the hurdle changes the timing of payments, not the final 20% split, a fund with no hurdle reaches the same totals directly.
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Built by Devon Coombs, CPA, MBA, Teaching Professor of Finance at Santa Clara University.