GP/LP Fund Structure with Multiple GP Catch-ups (Excel XLSX)

VIDEO DEMO

BENEFITS OF DOCUMENT

1. Run various investment scenarios in order to understand profit distributions for a preferred return-based investor group.

DESCRIPTION

This product (GP/LP Fund Structure with Multiple GP Catch-ups) is an Excel template (XLSX), which you can download immediately upon purchase.

I'd like to introduce you to a versatile fund model template I've developed. This tool is designed to help you model a wide range of fund structures, including real estate ventures, oil and gas projects, and various private equity investments.

Template Overview:

Input Flexibility: Simply input the initial investment amount and the expected annual distributions. The template is set up for a default 10-year period, but you can easily extend this by dragging the formulas into additional columns and adjusting the IRR and equity multiple calculations accordingly.

Monthly Conversion: If you prefer a monthly view, adjust the preferred return rate by dividing the annual rate by 12. Since the template uses a simple preferred return structure (not IRR hurdles), this straightforward adjustment ensures accuracy in a monthly context.

Core Features and Logic:

Preferred Return Priority:
•  Initial Cash Flows: 100% of the initial cash flows are allocated to pay the preferred return to the Limited Partners (LPs).

General Partner (GP) Catch-Up Options:
•  First GP Catch-Up: After the preferred return is paid, there's an option for a GP catch-up where 100% of the cash flows go to the GP until they receive a predefined proportion of the total distributions up to that point (referred to as Tier 1).

•  Adjustable Splits: If you want the LPs to receive both their preferred return and full return of capital before the GP starts receiving distributions, you can set the Tier 1 split to 0% for the GP and 100% for the LPs. This effectively nullifies the first GP catch-up.

Return of Capital:
•  Tier 1 Distribution: Cash flows are split according to the Tier 1 rates until the LPs' initial investment is fully repaid.

Second GP Catch-Up and Final Splits:
•  Second GP Catch-Up: Once the LPs are fully repaid, there's an option for a second GP catch-up to reach a specified percentage of the total distributions up to that point.
•  Tier 2 Distribution: Remaining cash flows are then split according to the final Tier 2 distribution rates.

Customization and Flexibility:
•  Accrual of Unpaid Preferred Returns: Choose whether unpaid preferred returns should accrue over time.
•  Compounding Unpaid Returns: Decide if unpaid preferred returns should compound, affecting future calculations.
•  Equity Balance Adjustments: Select whether distributions to the LPs beyond the preferred return should reduce their equity balance.

Analytical Tools:
•  Discounted Cash Flow (DCF) Analysis: The template includes DCF analyses with Net Present Value (NPV) calculations for both the GP and LPs.
•  Performance Metrics: Final outputs provide the Internal Rate of Return (IRR) and Equity Multiple for both parties, essential for assessing the investment's performance.

Ease of Use:
•  Single-Tab Logic: All calculations and logic are contained within a single worksheet tab. This design choice makes it easy to integrate the template into other workbooks without worrying about broken cell references or links.
•  Reusable Template: You can use this model repeatedly to analyze different deals and adjust assumptions as needed.
•  GP Fee Income: If the GP earns fee income on top of the available distributions, you can input this directly into the model as additional income.

This template is a practical tool that leverages your finance knowledge, allowing you to model complex fund structures efficiently. It's designed to help you analyze investment opportunities, understand cash flow distributions, and make informed decisions based on key financial metrics.

Source: Best Practices in Private Equity Excel: GP/LP Fund Structure with Multiple GP Catch-ups Excel (XLSX) Spreadsheet, Jason Varner | SmartHelping