AAllocator DeskTools for LP teams

Glossary

Fund Structure

Distribution Waterfall

The contractual sequence by which fund proceeds are split between LPs and the GP.

The two dominant structures are American (deal-by-deal) and European (whole-fund) waterfalls. European waterfalls require LPs to be made whole on capital and preferred return before the GP receives carry; American waterfalls allow earlier carry.

Clawbacks, GP catch-ups, and tiered carry rates make the waterfall one of the most economically consequential clauses in the LPA.

See also