Waterfall Obligations

The Waterfall Obligations add-in component keeps your team focused on building value and finding exits by demystifying the payoffs that need to be made before carried interest becomes available. When exiting investments, you can determine how many “chits” you can pay down under different theoretical exit prices.

At the Core

• Partnership Terms. A rules-based wizard models the terms and conditions set forth in your fund’s LPA, including the following waterfalls:
  • Whole Fund. Returns LP commitment, plus interest.
  • Take Down. Returns LP contributions to date, plus interest.
  • Deal by Deal. Returns acquisition cost, pro-rated fees, write-downs, GP catch-up, and then performs the 80/20 split.
• Waterfall Calculations. Allocates realizations (e.g., interest, dividends, profitable sales) according to your fund’s profit sharing rules.
• Obligations Reports. Provides clarity into the IOUs (aka “chits”) that the fund owes to limited partners before carried interest is available. You can see original amounts (e.g., cost basis) and accrued interest to date.

Taking You to the Next Level

• Informed Portfolio Management. Helps your team understand that portfolio companies that are just “treading water” have an 8% carrying cost, motivating them to take action to increase value.
• Deliberate, Waterfall-driven Exit Strategies. Provides your team with its own set of “what if” valuations to project exit values for each portfolio company. You can then use this set in over 20 fund performance reports to see how to improve your IRRs, multiples, and other performance indicators.
• Exit Negotiation Assistance. Shows how many “chits” you can pay off for theoretical exit prices enabling you to understand the obstacles to getting carried interest.