Calculators → Equity waterfall
Put in the preferred return, your IRR hurdles and the splits above each one. This divides the deal's cash between investors and the sponsor's promote, tier by tier, the same way the full model does — accruing monthly, and reducing every hurdle balance each time investors are paid.
| Tier | Investors | Promote |
|---|
In the full tool the waterfall runs off an actual monthly projection — rents, debt, refinance, sale — instead of a level distribution, and the same numbers flow straight into an investor pitch deck you can export to PowerPoint.
Open the full model freeNo credit card. One saved project on the free plan.
A waterfall decides who gets paid first, and how much the sponsor earns for doing the deal well. Cash arrives at the top and falls through tiers; each tier fills before anything reaches the next.
Investors get their money back together with a preferred return, usually 7–9% a year, compounding until it is paid. Nothing reaches the sponsor's promote until that balance is clear. This calculator accrues the pref monthly, which is what most operating agreements specify and what the full model does.
Above the pref, each tier runs until investors have hit a stated IRR, with cash split in the sponsor's favour along the way — a 80/20 to a 12% IRR, then 70/30 to 18%, and so on. The sponsor's slice is the promote (or carried interest). It is the sponsor's pay for performance, and it is why a deal that merely hits the pref earns the sponsor very little.
Beyond the last hurdle, everything splits at the residual rate — commonly 50/50. This is where a genuinely good deal makes a sponsor real money.
Every dollar paid to investors reduces all of the hurdle balances, not just the tier it came from. Models that track tiers independently overstate the promote, sometimes badly. This calculator uses the same routine as the paid product, which was checked line by line against an independent implementation.
This is a calculation tool, not advice. Every result depends entirely on the assumptions you enter — check them against your own operating agreement before relying on any of it.