Preferred Equity Waterfall Model - Private Equity & Real Estate - IRR & Equity Multiples - Annual & Monthly Basis
Originally published: 18/12/2020 16:00
Publication number: ELQ-62443-1
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Preferred Equity Waterfall Model - Private Equity & Real Estate - IRR & Equity Multiples - Annual & Monthly Basis

Ready-to-use template modeling the waterfall distribution of preferred equity in a private equity or real estate deal

Description
Highly flexible ready-to-use template used by private equity and real estate professionals, modeling the waterfall distribution of preferred equity.

This Excel model provides a 3-hurdle waterfall profit sharing scheme allowing the user to define the allocation of capital gains between the General Partner and the Limited Partner(s).

Multiple options are available, allowing for dozens of different scenarios:
- Annual and monthly bases
- Forecast period: up to 20 years
- Up to 3 hurdle rates
- Hurdles defined by IRR or Equity Multiple (or the most beneficial between IRR and Equity Multiple)
- Priority distribution to the LPs possible, otherwise Pari passu between stakeholders
- GP catch-up option available
- Outputs automatically generated

A spreadsheet "Outputs" highlights the most relevant information, allowing for a quick and easy understanding of the deal between GP and LPs. It shows :
- The deal risk / reward profile
- The expected returns per stakeholder (project, GP and LPs), both for IRR and Equity Multiple methods
- The cash-flow profile per stakeholder (GP and LPs)


The model is dynamic, you just need to fill out inputs cells (which mostly consists in filling out the project cash-flows), and the rest will calculate automatically! You can then play around with variables and main assumptions to evaluate different scenarios.

Feel free to share thoughts, ideas, recommendations... this is warmly welcomed!

This Best Practice includes
1 Unlocked Excel Model With Annual And Monthly Basis Available

Acquire business license for $500.00

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Further information

Understand and determine the allocation of capital gains between the General Partner and the Limited Partner(s) in a Private Equity or Real Estate deal
Model several scenarios to be used as a basis for negotiations

Private equity and real estate investments involving JV partners: General Partner and Limited Partner(s)

If the distribution scheme does not include a preferred equity nor a distribution preference

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