Joint Venture Cash Flow Waterfalls (Document Bundle)

Joint ventures happen in all sorts of businesses. You see them a lot in real estate syndication and oil / gas ventures, but they come up in any deal where you have a general partner that runs operations and an investor / investor group that funds most or all the costs.

Generally, the GP will take some fees as well as a share of the profits after the investor has reached some defined rate of return hurdle rate. The investor may or may not also receive a share of the profits after their preferred return has been satisfied. These deals can be structured in all sorts of ways and this template bundle covers many general joint venture structures that exist.

All the templates work by having the contributions / distributions plugged into the top and then all the cash flow logic takes over from there. It is often helpful to understand the risks / rewards of a deal to see the logic laid out explicitly. The cash flow waterfall outlines the order and priority in which cash flows generated by the joint venture are distributed among the participants.

If you are trying to analyze deals and/or present pro forma summaries to investors these models are a great place to start. Additionally, these are awesome tools even if you are just trying to learn finance and understand some of the spreadsheet formulas and logic that are used to create joint venture distribution summaries.

Note, you may have compounded interest rates, IRR hurdles, simple interest rates that accrue unpaid returns, and all kinds of stipulations. The truth is that the operating agreement language will end up defining what happens and you want the model to reflect whatever that may be.

Note, most of the templates have 10 periods (representing yearly periods) but you can easily adapt them to monthly periods and drag the formulas across for as many of the periods as needed without breaking any logic.

There are instructional videos within each file.