home / skills / a5c-ai / babysitter / waterfall-calculator

waterfall-calculator skill

safe

/plugins/babysitter/skills/babysit/process/specializations/domains/business/venture-capital/skills/waterfall-calculator

This skill calculates distribution waterfalls, carried interest, and clawback across LPA terms for American, European, and hybrid structures.

npx playbooks add skill a5c-ai/babysitter --skill waterfall-calculator

Review the files below or copy the command above to add this skill to your agents.

Files (1)

SKILL.md

2.8 KB

---
name: waterfall-calculator
description: Calculates distribution waterfalls per LPA terms, carry, clawback
allowed-tools:
  - Read
  - Write
  - Glob
  - Grep
  - Bash
  - WebFetch
metadata:
  specialization: venture-capital
  domain: business
  skill-id: vc-skill-025
---

# Waterfall Calculator

## Overview

The Waterfall Calculator skill calculates distribution waterfalls according to Limited Partnership Agreement (LPA) terms. It models carried interest, clawback provisions, and LP/GP distributions across various waterfall structures common in venture capital.

## Capabilities

### Waterfall Structure Modeling
- Support American (deal-by-deal) waterfalls
- Support European (whole-fund) waterfalls
- Handle hybrid waterfall structures
- Model fund-of-funds structures

### Carried Interest Calculation
- Calculate GP carry based on LPA terms
- Model catch-up provisions
- Handle tiered carry structures
- Track crystallized vs. unrealized carry

### Clawback Modeling
- Calculate potential clawback obligations
- Model true-up scenarios
- Track escrow requirements
- Project final settlement amounts

### Distribution Modeling
- Calculate LP and GP distributions
- Model management fee offsets
- Handle recycling provisions
- Track return of capital vs. profits

## Usage

### Calculate Waterfall
```
Input: Fund terms, realized/unrealized values
Process: Apply waterfall mechanics
Output: Distribution allocation, carry calculation
```

### Model Distribution Scenario
```
Input: Exit scenario, fund status
Process: Calculate pro forma distributions
Output: LP/GP split, carry amount
```

### Calculate Clawback Exposure
```
Input: Fund history, projected outcomes
Process: Model potential clawback
Output: Clawback exposure, escrow adequacy
```

### Project Final Settlement
```
Input: Portfolio status, exit projections
Process: Model fund conclusion scenarios
Output: Projected final distributions
```

## Waterfall Components

| Component | Description |
|-----------|-------------|
| Return of Capital | LPs receive contributed capital first |
| Preferred Return | LPs receive hurdle (typically 8%) |
| GP Catch-up | GP catches up to carry percentage |
| Carried Interest | 80/20 split (typically) on remaining |

## Integration Points

- **Distribution Waterfall Calculation Process**: Core skill
- **Cap Table Modeler (Agent)**: Connect to ownership data
- **K1 Generator**: Feed into tax reporting
- **Fund Accountant (Agent)**: Support accounting work

## Waterfall Types

| Type | Carry Calculation Basis |
|------|-------------------------|
| American | Deal-by-deal, immediate carry |
| European | Whole fund, after capital return |
| Hybrid | Combination with clawback |

## Best Practices

1. Model precisely per LPA terms
2. Track management fee offsets
3. Maintain accurate capital account balances
4. Model clawback sensitivity
5. Reconcile with fund administrator

Overview

This skill calculates distribution waterfalls according to LPA terms, modeling carried interest, clawback provisions, and LP/GP distributions across common venture fund structures. It supports deal-level and whole-fund mechanics and projects final settlement amounts under realistic exit scenarios. The tool is designed to produce clear allocation outputs for fund managers, accountants, and investors.

How this skill works

The skill ingests fund terms, capital account balances, realized and unrealized values, and exit scenarios, then applies waterfall rules (return of capital, preferred return, catch-up, and carried interest tiers). It supports American, European, hybrid, and fund-of-funds structures and models management fee offsets, recycling, and escrow/clawback mechanics. Outputs include LP/GP splits, crystallized vs. unrealized carry, clawback exposure, and pro forma distributions suitable for downstream accounting or K-1 generation.

When to use it

Model distributions after one or more exits to calculate GP carry and LP receipts
Run fund-level projections to determine potential clawback exposure and escrow needs
Compare American vs. European waterfall outcomes for financing or negotiation
Validate carry crystallization and true-up at fund close
Integrate with fund accounting or cap table agents for automated reporting

Best practices

Implement waterfall rules exactly as specified in the LPA; small wording differences change results
Keep management fee offsets and recycled capital aligned with accounting records
Track capital account balances continuously to distinguish return of capital vs. profits
Run sensitivity analyses on exit timing and valuations to surface clawback risk
Reconcile waterfall outputs with the fund administrator before final distributions

Example use cases

Calculate deal-by-deal carry and catch-up under an American waterfall for a portfolio exit
Project whole-fund distributions and carry under a European waterfall at fund wind-up
Assess clawback exposure mid-fund and recommend escrow sizing for downside scenarios
Produce pro forma LP/GP splits for investor reporting or negotiation support
Feed distribution outputs into a K-1 generator or fund accounting agent for tax and bookkeeping workflows

FAQ

Can it model tiered carry rates and catch-up provisions?

Yes. The skill supports tiered carry structures and catch-up mechanics and applies them in sequence per LPA rules.

How does it handle unrealized portfolio value?

Unrealized value can be included as projected exits; the model distinguishes crystallized carry from unrealized carry and calculates potential clawback exposure based on projected outcomes.