SmartHelping / Joint Venture Waterfalls / Excel
Preferred Return Model with an Optional Split During the Preferred Return Phase
Model GP and LP cash flows through three configurable distribution tiers. Split cash during the preferred-return phase, return LP capital and then apply the final profit split in one editable worksheet.
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See the model in action
Follow contributions and distributions through every tier.
The walkthrough shows how the preferred return, unpaid balance, LP equity basis and configurable GP/LP splits work together.
What the template includes
Flexible waterfall logic in a portable one-tab model.
Link the worksheet to capital contributions and distributable cash flow from an existing model, then define the preferred return and distribution rules.
Handle contributions and distributions over time
Use arbitrary cash-flow streams rather than relying on one contribution date or one exit distribution.
Set the preferred-return rate manually
Define the LP preferred-return rate and track the amount earned, paid and remaining unpaid through time.
Choose whether unpaid returns capitalize
Turn capitalization on when unpaid preferred returns should compound, or leave it off for non-compounding treatment.
Carry unpaid returns or start clean each year
Select whether unpaid preferred returns continue accruing or reset under the structure you are modeling.
Control how distributions reduce LP capital
Use the optional basis rule to reduce LP equity for distributions paid above the preferred-return amount.
Set the GP and LP split in every tier
Define separate sharing percentages for the preferred-return phase, return-of-capital phase and final profit tier.
Connect the waterfall to a working model
All logic sits on one tab, making it easier to reference capital needs and available cash from another workbook model.
Adjust formulas and assumptions directly
The workbook is unlocked and editable in Excel and can also be uploaded to Google Sheets.
Three-tier distribution waterfall
Separate the preferred return, capital repayment and final profit split.
This is a preferred-return model: the LP receives priority on its return in Tier 1, but invested capital is not returned until the Tier 2 rules apply.
Tier 1 / Preferred return
Split available cash between the GP and LP using a configurable percentage until the LP has received its full preferred return, including applicable unpaid or accrued amounts. This tier does not return invested capital.
Tier 2 / Return of capital
After Tier 1 is satisfied, split remaining cash using a second GP/LP percentage until the LP has received its full initial investment back.
Tier 3 / Final split
Once the preferred return and LP capital have been fully distributed, apply the final GP/LP split to all remaining available cash.
How to use it
Move from project cash flow to partner distributions.
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Enter contributions and available cash
Input the required capital contributions and the cash available for distribution in each period.
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Define the preferred return
Set the rate, capitalization choice and treatment of unpaid returns over time.
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Configure the three splits
Enter the GP and LP percentages for the preferred-return, return-of-capital and final profit phases.
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Review partner outcomes
Analyze distributions by category and tier alongside GP and LP IRR, MOIC and remaining balances.
Analysis and reporting
See what each partner receives and why.
The summaries separate preferred-return payments, return of capital and profit distributions instead of showing only one total cash-flow line.
Trace cash through every phase
Review the contributions and distributions allocated to the GP and LP in each tier.
Separate return types
Identify cash classified as preferred return, return of capital and profit distributions for each partner.
Measure GP and LP performance
Review final IRR and equity multiple outputs for both the GP and LP.
Monitor what remains unpaid
Track the outstanding preferred-return balance and LP equity basis as contributions and distributions occur.
Who gets value from it
Built for teams structuring GP and LP economics.
Real estate sponsors
Test a preferred-return structure before adding it to a property acquisition or development model.
Investment managers
Compare how tier splits, accrual rules and capital repayment affect partner outcomes.
Analysts and advisors
Explain the difference between preferred return, return of capital and final profit participation.
Financial model builders
Port the one-tab waterfall into a larger operating, fund or transaction model.
Also available in these bundles
Need more than one waterfall structure?
This preferred-return model is included in the following SmartHelping collections.
Joint Venture Waterfall Bundle
Compare preferred returns, IRR hurdles, catch-ups, promote structures and other GP/LP distribution frameworks.
View Joint Venture BundleSuper Smart Bundle
Get the complete SmartHelping template collection for operating forecasts, valuation, waterfalls, finance and more.
View Super Smart BundleRelated financial models
Compare other preferred-return structures.
Preferred Return with Investor Thresholds
Use investor-level thresholds to control participation in a preferred-return waterfall.
Explore the investor-threshold modelPreferred Return with Hybrid IRR / MOIC Hurdle
Combine a preferred return with a Tier 3 hurdle driven by IRR or equity multiple.
Explore the hybrid waterfallBasic Preferred Return Model
Use a more traditional preferred-return structure with GP and LP cash-flow allocations.
Explore the basic pref modelPreferred Return with GP Catch-Up Options
Compare multiple catch-up approaches after the preferred return has been satisfied.
Explore the catch-up modelQuestions before you buy
A few useful details.
Does Tier 1 return the LP's invested capital?
No. Tier 1 gives the LP priority on its preferred return, including applicable unpaid or accrued amounts. Return of the LP's initial investment occurs under Tier 2.
Can cash still be split with the GP during the preferred-return phase?
Yes. Tier 1 lets you define the percentage of available cash distributed to the GP and LP while the LP's preferred-return balance is being satisfied.
Can unpaid preferred returns compound?
Yes. The model includes an option to capitalize unpaid preferred returns so they compound. You can leave that option off when compounding is not part of the deal.
Can the model handle multiple contributions and distributions?
Yes. It supports arbitrary contribution and distribution cash-flow streams over time rather than requiring a single investment and exit.
Can I add this waterfall to another financial model?
Yes. All waterfall logic is contained on one tab. Reference the capital-investment and available-distribution rows from your working model to feed the calculation.
Is the workbook editable?
Yes. The formulas and tabs are unlocked and editable in Excel. You can also upload the workbook to Google Sheets.
Make the GP and LP economics visible
Model the preferred return, capital repayment and final split in one place.
Configure all three tiers and review partner-level distributions, IRR and equity multiples. One-time purchase for $45.
