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In fund accounting, a distribution waterfall is used by Private Equity and Real Estate Funds to distribute gains to stakeholders. This is based on predefined criteria outlined in partnership agreements.
Ultimately, waterfalls are a structured approach to allocate gains to the stakeholders. Typically, higher tiers receive distributions first before lower tiers. Once a tier’s requirements are satisfied, the remaining funds are applied to the next tier, continuing until the funds are fully distributed.
Private Equity funds require set guidelines for these distributions, as the funds do not liquidate their assets all at once. With varying amounts of proceeds at differing intervals, the waterfall distribution structure lays out how the different players recoup investments in the fund’s offering documents.
Our team of professionals help clients optimize fund waterfalls, making sure that distributions align with the agreed-upon terms.
Working with clients in real estate, private equity, and open-ended funds, as well as with general partners, we provide the guidance and support necessary to create, implement, and maintain a strong distribution plan for distribution waterfalls.
Our services include:
Speak with EA RESIG today about the right waterfall solution for your fund.
