Preferred Return Waterfall with Optional GP/LP Preferred Split (Excel XLSX)

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BENEFITS OF DOCUMENT

1. Analyze various preferred return deal terms / cash flows.

DESCRIPTION

This product (Preferred Return Waterfall with Optional GP/LP Preferred Split) is an Excel template (XLSX), which you can download immediately upon purchase.

Summary of the Preferred Return Cash Flow Distribution Model:

Priority on Preferred Return: The model ensures Limited Partners (LPs) receive a preferred return on their investment before any profit sharing with General Partners (GPs) occurs.

Three-Tier Distribution Structure:

•  Tier 1: Distributes cash flows between LPs and GPs until LPs receive their full preferred return, including any unpaid or accrued amounts.
•  Tier 2: Allocates remaining cash flows to return the LPs' initial invested capital.
•  Tier 3: Splits any additional profits between LPs and GPs based on predefined percentages after preferred returns and capital are fully paid.
Customizable Splits in Each Tier: Users can define specific percentage splits between LPs and GPs for each distribution tier, allowing flexibility in deal structuring.

Handles Variable Cash Flows: The model accommodates any amount and timing of cash contributions and distributions, making it adaptable to different investment scenarios.

Options for Unpaid Returns:

•  Compound Unpaid Returns: Users can choose to capitalize unpaid preferred returns, allowing them to accrue interest over time.
•  Accrual or Reset: Decide whether unpaid returns accrue to the next period or reset each year.
•  Adjustable Equity Basis: There's an option to reduce the LPs' investment balance with distributions paid above the preferred return, effectively lowering their invested capital over time.

Manual Preferred Return Rate: The preferred return rate is manually set, enabling alignment with specific terms agreed upon by LPs and GPs.

Comprehensive Financial Summaries:

•  Key Metrics: Includes Internal Rate of Return (IRR), Equity Multiple, and detailed contributions and distributions.
•  Cash Distribution Breakdown: Clearly classifies distributions into preferred return payments, return of capital, and profit distributions.
•  Easy Integration and Portability: All calculations are contained on a single spreadsheet tab, making it simple to incorporate into existing financial models. The model is fully editable and compatible with Google Sheets.

User-Friendly Design: Formulas and tabs are unlocked for transparency and customization, allowing users to review and adjust calculations as needed to fit their investment strategies.

Source: Best Practices in Fundraising Excel: Preferred Return Waterfall with Optional GP/LP Preferred Split Excel (XLSX) Spreadsheet, Jason Varner | SmartHelping