Bianca
Thu Oct 10 2024
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7 answers
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What is a waterfall in private equity?
A waterfall in private equity refers to a profit distribution framework that determines how investment returns are allocated between limited partners (LPs) and general partners (GPs). It typically involves several steps, including the return of capital to LPs, the payment of preferred returns to LPs, catch-up provisionss for GPs, and the final distribution of remaining profits between LPs and GPs according to a specified ratio.
