How this calculator works
Model a whole-fund waterfall with one initial limited-partner contribution and one final distribution. Return LP capital first, pay a compounded preferred return from available profit, optionally give the GP a full catch-up, then split remaining profit at the carry percentage. This simplified model assumes no management fees, interim cash flows, GP invested capital or clawback.
Formula
Preferred return due = initial capital × [(1 + hurdle)^years - 1]. Without catch-up, GP carry = carry rate × profit above the preferred return. With 100% catch-up, GP first receives up to preferred paid × carry / (1 - carry), limited by remaining profit, then receives its carry fraction of the residual.
Worked example
For $1,000 initial capital, $1,500 final value, one year, an 8% hurdle and 20% carry, the preferred return is $80. Full catch-up pays the GP $20, then a $400 residual splits $320 to LP and $80 to GP, giving $100 total carry. Without catch-up, the GP receives 20% of $420, or $84.
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Frequently asked questions
What happens below the hurdle?
The LP receives available funds. The GP receives no carry until capital and the preferred return have been covered.
What if profit only partly funds catch-up?
Catch-up stops when available profit runs out. The GP may then receive less than the stated carry fraction of total profit.
Does this calculate an actual partnership agreement?
Only the stated single-contribution whole-fund model. Agreements may use simple preferences, different catch-up rates, interim distributions, expenses or deal-by-deal waterfalls.