Cash Flow Priority in Waterfall
I know everybody says that Waterfalls significantly very depending on structure and partner but is it typical to have promote paid before return of capital?
I generally always thought that LPs should expect return of capital, then a pref, Then back to splits before hitting a hurdle and promoting the GP.
How have you seen it work before?
Haven’t seen this structure…would think that instead of this promote, it would be in the form of an upfront fee to GP
I was thinking the same thing. Either some other kind of see where the GP gets there juice, or alternatively I’ve also seen where a promo will accrue and be paid out at reversion.
Yeah, I mean for a development deal. I can see a negotiation on a land contribution by GP at x% accrual rate paid out at reversion. However, still a fixed % rather than a promote with some form of clawback/payment restrictions if the deal goes south
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