Carried Interest Calculator

A carried interest calculator estimates the GP's performance allocation from a fund waterfall. This page takes committed capital, total distributions, preferred return, fund life, carry percentage, hurdle basis, and catch-up share, then shows how the simplified European waterfall allocates proceeds between LPs and GP.

A common private equity and venture capital teaching example is 20% carried interest, often discussed alongside a management fee. Actual terms vary. Established managers, specialist strategies, co-investment structures, emerging managers, and separate accounts may use different carry percentages, hurdles, or catch-up terms.

The preferred return is the return LPs receive before the GP earns carried interest. It protects LPs from paying performance economics before the fund has cleared a minimum return threshold. The calculator lets you model the hurdle as simple or annually compounded because those assumptions can produce very different hurdle amounts.

A European waterfall calculates carry at the whole-fund level after fund-level capital and preferred return are returned. An American waterfall can calculate carry deal by deal, allowing earlier carry payments on profitable exits. American waterfalls often need clawback or escrow protections because later losses can otherwise leave the GP overpaid.

A GP catch-up is a tier after the preferred return where a larger share, sometimes 100%, goes to the GP until the GP has caught up to the negotiated carry share of total profit. After that catch-up tier, remaining residual profit is usually split by the carry percentage, such as 80/20 between LPs and GP.

Without catch-up, the GP receives carry only on profit above the hurdle. With full catch-up, the GP first receives a catch-up amount designed to restore the GP to the agreed carry percentage of all fund profit after capital return. That is why a 20% carry fund with full catch-up can pay more GP carry than a 20% carry fund with no catch-up.

No. Clawback is a contractual mechanism that can require the GP to return excess carry if later fund performance makes earlier carry payments too high. This page models a simplified whole-fund waterfall, so it does not calculate deal-by-deal overpayments, escrow balances, guarantees, or clawback repayments.

No. Management fees are separate from carried interest. A fund can charge a management fee even before carry is earned. This calculator focuses on the performance allocation after capital return, preferred return, catch-up, and residual split. Management-fee offsets and fee waivers belong in a more detailed fund model.

Tax treatment depends on jurisdiction, holding period, fund structure, partner status, and current law. In the United States, Section 1061 rules can affect whether certain carried interests qualify for long-term capital gain treatment. This calculator does not provide tax advice or determine the tax character of any allocation.

You can use it to understand broad carry mechanics if the fund has similar whole-fund waterfall terms. Venture funds can have different timing, recycling, write-off, and distribution patterns, so actual VC carry should still be checked against the LPA and fund statements.

In this simplified model, carry starts after cumulative distributions have returned committed capital plus the preferred return hurdle. The calculator shows that break-even distribution amount beside the waterfall table so you can see when GP economics begin.

Fund life years are needed when the preferred return accrues over time. A one-year simple hurdle is much smaller than a five-year compounded hurdle at the same annual rate. If your agreement uses actual dated cash flows, this simplified input is only an approximation.