Deal Waterfall & Equity Return Analysis

Model equity returns and distribution waterfall.

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Steps: 1) Model annual cash distributions 2) Calculate cumulative distributions to each investor 3) Model exit proceeds and waterfall 4) Calculate IRR and equity multiple by investor 5) Identify preferred return thresholds 6) Model carry/promote scenarios 7) Create distribution schedule

Output: Waterfall analysis, equity return by investor, distribution schedule, IRR and multiple by investor tier.

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Why this works

Waterfall modeling ensures fair allocation. Clear model prevents disputes with co-investors.

Risks & review

Complex waterfalls confuse investors. Simple, transparent models build investor confidence.