European Waterfall
A European waterfall delays carried interest payments to the general partner until all capital contributions are returned to investors, including preferred returns. This structure minimizes the risk to investors by ensuring they receive all their initial investment and gains before the general partner takes performance fees. It is more conservative than the American waterfall and is common in European private equity funds.
Key Takeaways
- Distributes carried interest only after all investor capital is returned.
- Ensures limited partners recover capital before the general partner receives any carried interest.
- More conservative than the American waterfall.
- Common in European private equity funds.
