CARRY/WATERFALL MODELLING

This category of carried interest products and services usually involves spreadsheet-based solutions, typically leveraging MS Excel.

• MS Excel-based Carried interest/Waterfall Models & Templates
• Other Related Fund Accounting Models & Templates
• Carried interest/Waterfall Modelling Services
• Model Review/Audit & Testing Services

BENEFITS

(if designed and tested properly):

• Cheap (almost every computer already has MS Excel installed on it)
• No lengthy and/or costly implementation
• No significant additional training
• Flexibility
• Transparency & Auditability

DRAWBACKS:

• Excel cannot handle well large volumes of data (the model can get very slow)
• If not designed and tested properly, Excel models are susceptible to human error
• If not protected, Excel models are prone to accidental amendments

CARRY MODEL, SOFTWARE, METHODOLOGY & PROCESS CERTIFICATION

This category of carried interest products and services includes some of the following services:

• Carry/Waterfall Model Audit, Assessment and Certification
• Carry Software Audit, Assessment and Certification
• Carry Calculation Methodology Audit, Assessment and Certification
• LP Carry/Fee Validation Methodology and/or Process Audit, Assessment and Certification

BENEFITS

• Makes the product/services more robust and improves their quality
• Reduces the risk of error and reputational and financial damaged to the provider
• Endorses the provider’s brand through validating the quality of the product/services
• Boosts client confidence and trust in the products/Good selling point to clients

DRAWBACKS:

• May be costly
• May require some time commitment from the provider

LP CARRY/FEE VALIDATION

This category of carried interest products and services includes a variety of LP carry/fee validation solutions such as:

• Fully Outsourced LP Carry/Fee Validation
• LP Carry/Fee Validation Software Platforms
• LP Carry/Fee Validation SaaS Solutions
• LP Carry/Fee Validation Excel Based Templates
• LP Carry/Fee Validation Training
• LP Carry/Fee Validation Methodologies, Procedures & Guidelines
• LP Carry/Fee Validation Consultancy Services

BENEFITS

• May result in significant savings in the form of refunds if mistakes are uncovered
• Ensures transparency
• Ascertains compliance with the LPA provision

DRAWBACKS:

• Some of the solutions may be costly
• Some of the solutions may require significant human resources and time investment

CARRY ALLOCATION &
CARRY PLANS

This category of carried interest products and services features some of the following products & services:

• Carry Participant Allocations & Carry Plans Structuring
• Carry Participant Allocations & Carry Plans Consultancy Services
• Carry Participant Allocations & Carry Plans Software Platforms
• Carry Plan Administration & Compensation Management
• Deferred Cash & Vesting Schedules Management
• Other Carry Allocation & Carry Plans Products & Service

BENEFITS

• Improve employee incentives (applicable to structuring services)
• Increase employee efficiencies (applicable to structuring services)
• Increase fund performance/IRRs (applicable to structuring services)
• Automate complex and/or varied multi-faceted calculations (applicable to software platforms)
• Increased information management and reporting capabilities (applicable to software platforms)
• Reduce reliance on spreadsheets and other manual processes (applicable to software platforms)
• Digitise employee and other carry data (applicable to software platforms)
• Make the processes more reliable, from a control perspective (applicable to software platforms)
• Cut the process time down significantly (after the initial set-up) (applicable to software platforms)
• Scale the relevant processes to practically unlimited number of funds, CIHs, investee funds, respectively
• Improves user experience

DRAWBACKS:

• There is usually a significant cost associated with these products & services
• May have lengthy and/or costly implementation
• Less transparency (the ‘black box’ issue) compared to other solutions (e.g. MS Excel)
• If not implemented properly, can potentially undermine the whole process and result in losses

CARRY STRUCTURING

This category of carried interest products and services features some of the following services:

• Fund Formation & Carry Structuring Legal Services
• Carry Participant Allocations & Carry Plans Review, Structuring and Optimisation Services
• Review and Redrafting of LPA Waterfall Provisions
• Other Carry Structuring Services

BENEFITS

• Optimise your structure from a tax perspective (applicable to Fund formation & Carry Structuring Services)
• Pre-empt and fix potential mechanics and calculational issues with carry arrangements arising from the LPA wording applicable to... (Review and Redrafting of LPA Waterfall Provisions)
• Identify incentive, allocation and mathematical issues with Carry Allocations & Carry Plans (applicable to Carry Participant Allocations & Carry Plans Review, Structuring and Optimisation Services)
• Optimaise the efficacy of the GP carry allocations and carry plans from an incentive, structural and mathematical perspective (applicable to Carry Participant Allocations & Carry Plans Review, Structuring and Optimisation Services)

DRAWBACKS:

• May involve significant cost

CARRY TECHNICAL TRAINING

This category of carried interest products features some of the following carried interest training courses:

• Carried Interest Master Class
• Build-your-waterfall-model Workshop

The courses are provided in the following formats:

• In-house
• Online (in-person via WebEx, not pre-recorded) – group and one-on-one
• Online (pre-recorded)
• Open-enrollment

BENEFITS

• Build a solid foundation of your understanding of the theory of carried interest and waterfalls – mechanics, modelling, accounting, and reporting
• Helps you familiarise yourselves with the mechanics of a variety of waterfall arrangements (Whole-of-fund/European-style carry, Deal-by-deal/Hybrids, Multi-tiered Promote triggered by IRRs and Multiples, etc.)
• Allows you to practice the theory you’ve learned through case studies and practical exercises
• Equips you with a basic waterfall model at the end of the course (applicable to the Build-your-waterfall-model Workshop)

DISADVANTAGES

• None

OTHER CARRY/WATERFALL
PRODUCTS & SERVICES

This category includes all carry/waterfall products and services that are not covered in any of the other categories listed above.