Co-GP Waterfall / Model Tests

Based on the most helpful WSO content, Co-GP waterfalls can be complex, as they often involve multiple layers of contributions and profit-sharing structures. Here are some key points and resources to guide you:

1. Understand the Basics of Waterfalls:

   • Waterfalls typically involve tiers or hurdles, such as preferred returns, IRR thresholds, and promote splits.
   • For Co-GP deals, the structure may include additional layers to account for the contributions and roles of multiple GPs.

2. Key Considerations for Co-GP Waterfalls:

   • Equity Contributions: Ensure the model accounts for varying equity contributions from each GP.
   • Promote Splits: Define how the promote (profit share) is divided among the GPs after meeting LP hurdles.
   • Catch-Up Provisions: Some Co-GP structures include catch-up provisions to ensure GPs receive a specific share of profits after LPs are paid.
   • Clawbacks: Be prepared to model clawbacks, which ensure GPs return excess profits if certain conditions aren't met.

3. Resources for Modeling:

   • Templates: WSO threads mention templates like those from BIWS and REFM, which can be helpful for modeling waterfalls, including Co-GP structures.
   • Reading Material: Articles such as those from Pircher and Latham & Watkins provide insights into joint venture waterfalls and nuances in structuring deals.
   • Practical Experience: Many WSO users emphasize learning through hands-on experience and adapting models to specific deal terms.

4. Case Study Preparation:

   • Focus on understanding the mechanics of preferred returns, IRR hurdles, and promote splits.
   • Practice building flexible models that can handle multiple scenarios, such as varying equity contributions or changes in promote structures.
   • Review example models and case studies to familiarize yourself with common structures and potential pitfalls.

For additional guidance, you can explore resources like: - http://www.pircher.com/media/publication/50_SACArticle.pdf</a">Pircher Article on Waterfalls - https://www.lw.com/mediaCoverage/real-estate-joint-venture-waterfalls-a</a>…">Latham & Watkins on Joint Venture Waterfalls

These resources and tips should help you prepare effectively for your upcoming case study. Good luck!

Sources: Differences between Co-invest and Secondaries?, Best way to learn Real Estate Waterfalls?, https://www.wallstreetoasis.com/forums/qa-pevc-fof-principal?customgpt=1, https://www.wallstreetoasis.com/forum/real-estate/waterfallpromote-nuance?customgpt=1