How Do I Set Up a Waterfall and Return Terms?

Payout rules (the waterfall) decide how a payout is split between fees, investors, and the sponsor. You set them when preparing a payout or payout plan, and you can make them binding with approved return and fee terms.

Payout rule options

Under Payout Structure:

• Payout Rule Format: Preferred Return First, Return Of Capital First, Straight LP / GP Split, or Tiered LP IRR Hurdles.
• Final LP Share (%), with Quick Split buttons for 90/10, 80/20, 70/30, and 50/50.
• Annual Preferred Return (%) and whether to Return Outstanding Capital Before Profit Splits.
• Unpaid Preferred Return: Current Period Only or Carry Into The Next Period.
• GP Catch-Up, Tiered Cash Splits, or IRR Hurdles.

Other sections:

• GP Recipients divides the GP share among co-GPs.
• Management & Other Fees are paid first, in order. Fees can be annual on outstanding or committed capital, a percentage of the cash budget, or a fixed amount.
• Share-Class Terms lets a class use its own rules.
• Debt Hurdles pay noteholders first, before the equity rules.

Lock in approved terms

1. Go to Money, open the Accounting tab, and choose the Investment.
2. Under Return and Fee Terms, click Change Return and Fee Terms.
3. Enter a Start Date and Reason for Change, set the rules, and click Send to Another Reviewer.
4. A different team member opens Review Terms and clicks Approve Return and Fee Terms. If no one else in your workspace can approve, you can approve it yourself after confirming your password and a code.

Approved terms apply from their start date, and every payout must follow them. Payouts already approved stay the same.

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