I have done so many joint venture waterfalls based on many operating agreements. This is a new one that I thought would fit perfectly in the joint venture template library. All the logic fits on a single tab and it is easy to incorporate into any existing model that has annual cash flows.
$45.00 USD
After purchase, the template will be immediately available to download. It is also included in the joint venture and sensitivity table bundles as well as the Super Smart Bundle.
Waterfall Hurdles / Tiers:
- Preferred Return > Equity Repayment > IRR or MOIC target > thereafter.
The key new piece of logic I added to this template that is in no other is the 3rd tier. This says that cash flows are split between the LP/GP at a defined percentage until the IRR or MOIC is reached, whichever comes first. After that is reached (if it is reached), there is one final adjustment to cash flow splits and usually in that last split the GP / operator is going to get more of the cash flow since the LP / investor has reached their target IRR or MOIC hurdle.
Each hurdle is looking at the amount due to the LP / investor when determining if a hurdle has been met and at each tier cash can be configured to have a different split percentage. There is also an initial contribution rate that can be configured for the LP and GP.
Template Features:
- Up to 10 years plus initial investment year.
- All logic on a single tab with all formulas editable and unhidden / unlocked.
- Easy to integrate into any existing model, just copy and paste the whole tab into your workbook and reference the initial investment and annual distributable / distributed cash flows.
- 5 sensitivity tables (data tables) that sensitize the IRR and MOIC (equity multiple) inputs.
I think it can be useful to make tier three a variable target that essentially lets the investor know the minimum return they will get in terms of IRR or MOIC before giving up a major share of distributions.
Similar Waterfall Models:
