Learn to Build a Private Equity Waterfall with 5 Videos

  • Peter Lynch

A series of videos explaining the most common distribution waterfall used in private equity is available below. (For a written explanation please click here.)

A standard distribution waterfall is made complicated only by the amount of vocabulary used to describe how it works. The math is otherwise simple, as these videos demonstrate.

UPDATE: All videos have now been combined into one for convenience. The individual videos remain available below should you want to jump to a specific part.

Whiteboard Visual Overview: A visual overview of what takes place in a distribution waterfall.

First Excel Example: The first Excel template excludes the 20% catch-up provision to make the math easy to follow.

Catch-Up Calculation Whiteboard Example: The language describing the catch-up provision in a distribution waterfall has resulted in many emails asking for clarification. This video demonstrates how simple it is.

First Catch-Up Example: The second Excel template introduces the catch-up provision. This example makes it very easy to check your own work should you mirror the exercise yourself.

Private Equity Catch-Up Provision: The final example introduces language that would be found in legal documents detailing a distribution waterfall, and demonstrates how small changes to language can be meaningful. It follows with the calculation for the most standard private equity distribution waterfall, and concludes with some thoughts on how to check your work.

To download the Excel file mentioned in the video please visit this page: Distribution Waterfall.

For more detailed waterfall instruction please see the LBO Case Study course.