Distribution Waterfall

A distribution waterfall outlines the order of profit distributions in investment funds. It establishes how and when profits are distributed to investors, prioritizing returns based on different tiers or hurdles. This structure is common in private equity and real estate funds, ensuring that profits are allocated in a manner that aligns with the interests of both investors and fund managers.

• Defines the order of profit distributions in funds.
• Prioritizes returns based on tiers or hurdles.
• Common in private equity and real estate.
• Aligns investor and manager interests.