SmartHelping / Joint Ventures & Waterfalls / Excel
Preferred Return Waterfall with Investor Thresholds
Model how cash moves among LP investors and the GP when only investors above a defined contribution threshold earn an accrued preferred return. Compare two distribution structures across a 10-year hold.
Both waterfall versions are included.
Add Both Waterfall Versions to CartImmediate download after purchase. By purchasing, you agree to the Terms of Service.
See both versions in action
Walk through the investor inputs and distribution logic.
Use the primary walkthrough to see the threshold-based waterfall, then open the additional video and presentations for the second version with separate annual-profit and exit-liquidity distributions.
What the templates include
A flexible way to model different economics within one LP pool.
Enter each investor separately, automatically identify who earns the preferred return, and track how cash moves through capital repayment, accrued pref and the final carry split.
Compare two distribution structures
Use the original three-step waterfall or the alternate version that separates annual-profit distributions from exit liquidity.
Enter investors individually
Model contributions and results for up to 35 LP investors rather than treating the entire investor pool as one combined balance.
Separate pref and non-pref investors automatically
Set the contribution threshold and let the model bucket investors into preferred-return and non-preferred-return groups.
Adjust the non-compounding preferred return
Choose the preferred-return rate applied to qualifying LP investors and track the accrued balance until its selected payment year.
Change the final LP and GP percentages
Define how remaining distributable cash is allocated between the LP and GP pools after the applicable capital and preferred-return steps.
Test cash flow and liquidity timing
Model up to 10 years and select the year in which refinance or exit liquidity becomes available for capital and accrued-pref payments.
See IRR and equity multiple by LP
Review the return outcome for each individual LP investor based on contribution amount, threshold status and modeled distributions.
Inspect and adapt the calculations
All formulas and cells are unlocked. Light-yellow formatting identifies adjustable inputs, with waterfall logic on one tab and investor inputs on another.
Waterfall Version 1
Repay LP capital, settle the qualifying pref, then apply the carry split.
This version uses one main waterfall sequence for distributable liquidity. The preferred return is accrued without compounding and is limited to LP investors whose contributions exceed the defined threshold.
Step 1 / LP capital
Distribute 100% of available cash to the LP pool until invested LP capital has been repaid.
Step 2 / Accrued pref
Pay the accrued, non-compounding preferred return to qualifying LP investors in the selected year, typically when a refinance or exit creates liquidity.
Step 3 / Carry split
Allocate remaining cash between the LP pool—including both pref and non-pref investors—and the GP pool using the defined percentage split.
Waterfall Version 2
Separate recurring profit distributions from exit liquidity.
This alternate structure gives annual operating profits and refinance or exit proceeds their own distribution rows, allowing the GP to participate in annual profits during the hold period.
Use a separate hold-period distribution row
Allocate annual profit independently from exit liquidity so the GP can receive a share of operating distributions during the hold.
Reserve capital repayment for the liquidity event
Direct refinance or sale proceeds first toward repayment of all LP capital.
Pay the threshold-based pref after capital
After LP capital is repaid, use remaining exit liquidity to settle the accrued preferred return owed to qualifying investors.
Split what remains after the priority payments
Apply the defined LP and GP carry percentages to any exit liquidity remaining after capital repayment and accrued pref.
How to use it
Move from investor contributions to individual return outcomes.
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Enter each LP contribution
Add up to 35 investors and their investment amounts on the dedicated investor-input tab.
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Set the threshold and economic terms
Define which contribution level earns the pref, then set the preferred-return rate, carry percentages and forecast horizon.
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Add cash flow and liquidity events
Enter annual distributable cash and select the year in which refinance or exit proceeds become available.
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Review distributions and returns
Follow cash through the applicable waterfall and compare IRR and equity multiple for every LP investor.
Who gets value from it
Built for sponsors explaining different economics within one deal.
General partners and sponsors
Test a threshold-based preferred return and explain how capital repayment, accrued pref and carry affect the sponsor economics.
Limited partners
Review how contribution size and threshold status change projected distributions, IRR and equity multiple.
Fund and deal managers
Maintain an editable LP list and compare two structures for annual cash flow and refinance or exit liquidity.
Advisors and modelers
Use unlocked formulas to inspect the allocation logic, modify assumptions and illustrate alternative deal terms.
Also available in these bundles
Need more waterfall and investment models?
Both versions of the Preferred Return - Investor Thresholds model are included in the following SmartHelping collections.
Joint Venture Waterfall Bundle
Compare preferred returns, IRR hurdles, equity-multiple hurdles, catch-ups, promote structures and other GP/LP distribution frameworks.
View the Joint Venture BundleSuper Smart Bundle
Get the complete SmartHelping template collection for joint ventures, operating forecasts, valuation, finance and more.
View Super Smart BundleRelated waterfall and investment models
Compare other preferred-return, hurdle and deal structures.
Hybrid IRR / MOIC Hurdle in Tier 3
Combine a preferred-return structure with alternative IRR and equity-multiple tests in the third waterfall tier.
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Explore the catch-up modelPreferred Equity with a Subordinate IRR Hurdle
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Explore the IRR catch-up modelSimple-Interest Preferred Return with Multiple Hurdles
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Explore the self-storage modelQuestions before you buy
A few useful details.
Are both waterfall versions included for $45?
Yes. The single $45 purchase includes both the original waterfall and the alternate version with separate annual-profit and exit-liquidity distribution rows.
What is the main difference between the two versions?
Version 1 uses one sequence that repays LP capital, pays the qualifying accrued pref and then applies the final LP/GP split. Version 2 separates annual operating-profit distributions from refinance or exit liquidity, allowing GP participation during the hold before exit proceeds move through capital repayment, accrued pref and carry.
How does the investor threshold work?
Enter the contribution threshold and each LP's investment amount. The model automatically separates investors into pref-earning and non-pref-earning buckets based on whether they qualify.
Does the preferred return compound?
No. The preferred return described in these templates accrues without compounding and is paid to qualifying LP investors in the selected liquidity year.
How many investors can I model?
The investor-input tab supports up to 35 individual LP investor slots.
What return metrics are shown?
The model calculates IRR and equity multiple for each individual LP investor based on contributions and modeled distributions.
Can I edit the formulas and waterfall logic?
Yes. All formulas and cells are unlocked and editable. Light-yellow formatting identifies adjustable inputs, the main waterfall logic is on one tab, and the investor inputs are held on a second tab.
Make the distribution logic easier to explain
Show every investor how the waterfall reaches their return.
Model contribution thresholds, capital repayment, accrued pref, carry and individual LP returns across both included versions. One-time purchase for $45.
