American Waterfall
An American waterfall prioritizes limited partners in the distribution of profits before the general partner receives any carried interest. This structure ensures that investors recoup their initial investment plus any preferred returns before the general partner receives performance fees. It is commonly used in U.S.-based private equity and real estate funds.
Key Takeaways
- Prioritizes limited partners in profit distributions.
- Ensures investors recover capital before the general partner.
- Common in U.S. private equity and real estate funds.
- Protects investors' preferred returns before GP payout.
