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Waterfall 202 - Return of Capital Template

The Return of Capital template is designed to direct distribution cash to the return of capital bucket for one or more classes.

Pre-Conditions For Use:

None

 

The screenshot below shows the two required fields for input to utilize the template:
rc_1.png

Input Fields:

Classes: Select one or more classes that you want to direct distribution cash flow to.  If you are selecting more than one, ensure they are equal in rights.  If one class needs priority over another, setup two different rules (i.e. LP investors are paid back before GP Class members would require two rules).

Distribution Method: this will tell the system how to allocate the distribution amount between the investors in the event you are not distributing enough to return the total amount of capital in a distribution batch.  Choose from:

  • Pro-rata by Ownership: Most common choice. The amount distributed will be allocated according to each investor’s class ownership percentage,
  • Prorata by Unpaid Preferred Return: Generally not appropriate for Return of Capital distribution allocation, and requires that a pref rate and rule be configured for all classes.  The amount distributed will be allocated according to each investor’s percentage of the total amount of unpaid preferred return.  For example, if you are distributing $50,000 but $100,000 of preferred return is accrued total to all investors and John Smith has accrued $1000 (1%), he will be paid 1% of the total distribution amount, or $500.
  • Equal Distributions: if everyone receives the exact same amount (one off)
  • Total Amount: Generally not recommended. Only to be used if there is only one investor, as it will allocate the total amount of the distribution to each investor.
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