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What's New

Joint Venture Cash Flow Waterfall with Priority Preferred Equity Option

Type of Business :

Financial Models

Price : USD 75 75.00

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  • Short Description

    This is a joint venture financial template built in excel. Its purpose is to show how cash is distributed between preferred equity as well as common equity (Investor vs. Sponsor) or (Limited partner vs. General Partner).

  • Full Description

    Up to 10 years can be modeled and the main user input is simply the year 0 through 10 project equity contributions and distributions, preferred return, and hurdle rates. This is a two-tier model and if the preferred equity leg is not required, that can easily be zeroed out and all the cash will flow to the standard IRR hurdle waterfall with up to 3 hurdle rates and defined percentage splits per hurdle. The point of this model was to allow a separate preferred equity leg and potential equity kicker with a preferred return to sit on top of your regular joint venture distributions. In the preferred equity leg, 100% of all cash goes back to investors along with a defined preferred return until the equity balance has been fully repaid. The user can define if any unpaid preferred return gets accrued as well as if there is a hard reset after each year (with yes/no selectors). Below the preferred return, there is a kicker rate that can be defined for how much of the remaining cash goes to the preferred equity leg. Any remaining cash flow will then go to common equity and that could be 100% to a sponsor/general partner or it could be a secondary joint venture with its own cash sharing schedule between investors/sponsors. This secondary waterfall has up to 3 IRR hurdle rates and defined splits at each hurdle in your more typical joint venture model fashion. The cash flow for the secondary splits is based on pari-passu until the first hurdle is met, but it can be modified to any percentages desired. A final summary shows the total IRR and equity multiple of all legs involved as well as their cumulative cash flow and a visual. Note, there have been instructions added after the video that give a definition for each input cell so it is easier to follow along. There have also been upgrades to the general flow to make it easier to zero things out that may not be required.

  • Table of Content
    No. Content
    Key A key describes each input cell.
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