Catch-Up Provision Calculator
The formula
What the catch-up tells you
The bridge between "LP got their 8%" and "GP earns 20%": after the pref, distributions go entirely to the GP until its profit share hits the carry rate.
Calculation: 100% catch-up tranche = pref × c ÷ (1 − c); then split pro rata until GP share = c. Enter your inputs and every substitution is shown below the result.
Reading the result
A 100% catch-up front-loads GP economics; a 50/50 catch-up (both sides during the sprint) is the gentler variant.
Rules of thumb: 100% GP catch-up at 20% carry is the US default
Limitations and best practice
The clause only bites if the hurdle is ever cleared — funds that never return 8% pay no carry, clause or none.
This calculator gives an estimate based on standard formulas; it is not professional financial, medical, legal or engineering advice. Verify anything you plan to act on with a qualified professional and your own records.
Frequently asked questions
What is 80/20 after catch-up?
Can the catch-up be delayed?
Source & methodology
ILPA model LPA language.
Catch-Up Provision explained: formula, worked example and honest limits
You are here because you need a specific number, and you want to see how it was produced before you rely on it. Searchers land on a Catch-Up Provision page for three reasons — to plan, to compare options, and to check that somebody else’s arithmetic is honest. This tool serves all three, and everything after the calculator explains the model instead of hiding it.
The useful way to hold Catch-Up Provision is as a ratio with a story attached: 100% catch-up tranche = pref × c ÷ (1 − c); then split pro rata until GP share = c says how the parts combine, and the $7,968,572 figure above is simply that sentence written in numbers. Everything that follows unpacks one clause of the sentence at a time.
A calculation like this one is worth roughly as much as a careful sentence: it forces several vague considerations into one comparable quantity. Once Catch-Up Provision is on the table, the argument can stop being about impressions.
What makes a calculation page trustworthy is that its copy is derived from its own arithmetic: here GP take after pref + catch-up = $7,968,572, recomputed every time a field changes, and the sensitivity section ranks the inputs that move the result — Distributable profit so far first, at ≈10.0 % of the headline for a ten-percent error either way in that input — which is the thread the rest of this guide pulls on.
Inside the Catch-Up Provision calculation: formula and every input
The engine implements a single stated model: 100% catch-up tranche = pref × c ÷ (1 − c); then split pro rata until GP share = c. There is no hidden coefficient and no login-gated precision — the formula printed is the formula executed, which is also what makes the result citable.
Preferred return satisfied ($) (example value 21,960,555) is a quantity rather than a category — precision here is cheap and worth having. If you are unsure what belongs in this field, look at the printed steps: the substitution shows exactly how the engine uses it.
Carried interest (%) (example value 20) is a plain measured quantity — the unit shown in the label is the unit the formula expects. Enter it exactly as your document states it — quoted annual, monthly and effective rates are three different numbers.
Distributable profit so far ($) (example value 39,842,861) is a plain measured quantity — the unit shown in the label is the unit the formula expects. The example value is there to demonstrate the mechanics, not to describe your situation — overwrite it.
The default Catch-Up Provision calculation, written out in full
Rather than describe the calculation, here it is end to end — every substitution in order, starting from the inputs above. Starting figures: Preferred return satisfied ($), Carried interest (%), Distributable profit so far ($). Run to the end, the GP take after pref + catch-up resolves to $7,968,572 — Catch-up tranche is $5,490,139; GP's share of profit: 20.0% on the bands this tool uses.
- Catch-up = $21,960,555 × 0.20 ÷ 0.80 = $5,490,139
- Waterfall order: pref → 100% GP catch-up → pro rata; GP total $7,968,572
Catch-up tranche size — $5,490,139. This is the number experienced users quote when the headline alone would mislead.
Distributed to LP — $31,874,289. This is the number experienced users quote when the headline alone would mislead.
GP share of total profit — 20.0 %. If your inputs change, this is usually the first companion figure to move.
Re-running with your own figures is instant; re-running by hand once is the best way to know the tool is telling you the truth.
The Catch-Up Provision corridor: your result across a realistic band
The honest version of any estimate is a corridor, and this one is cheap to produce: Catch-Up Provision was recomputed at 5 points along the dominant input, with every other field left untouched.
| Distributable profit so far setting | GP take after pref + catch-up |
|---|---|
| 80 % of the example value | $6,374,858 |
| 90 % of the example value | $7,171,715 |
| example inputs | $7,968,572 |
| 110 % of the example value | $8,765,429 |
| 120 % of the example value | $9,562,287 |
That spread — $6,374,858 at the low end, $9,562,287 at the high — is what a careful read of Catch-Up Provision looks like: a band you can state out loud, with the reason for each edge. Reproduce it in the form above by editing Distributable profit so far alone; the substitution steps will follow your figures exactly.
Sensitivity: which inputs change Catch-Up Provision the most
Generic advice says “it depends on your inputs”; this section says exactly how much. Each field was perturbed by ±10 % in isolation and the GP take after pref + catch-up recomputed, so the ranking below is measured rather than asserted. Read it as a map of where Catch-Up Provision is fragile — drawn for the example inputs, which is the map you want when deciding what to measure carefully.
- Nudge Distributable profit so far by ±10 % and Catch-Up Provision lands between $7,171,715 and $8,765,429 (sensitivity ≈10.0 %)
- Carried interest +10 % → Catch-Up Provision = $8,765,429 · −10 % → $7,171,715 (the GP take after pref + catch-up shifts ≈10.0 %)
- Preferred return satisfied +10 % → Catch-Up Provision = $7,968,572 · −10 % → $7,968,572 (the GP take after pref + catch-up shifts ≈0.0 %)
Distributable profit so far is the dominant lever here: ten percent either way moves the result by about 10.0 %, from $7,171,715 to $8,765,429. Measure that input from a document rather than from memory, and Carried interest is effectively tied with it (≈10.0 % for the same nudge), so verify the pair together. Everything below that can stay approximate, which is a licence to stop chasing data that would not change the decision.
Reading the result: bands, zones and thresholds
Nobody acts on a bare figure — they act on a figure with a comparison attached. The default case lands in the “Catch-up tranche is $5,490,139; GP's share of profit: 20.0%” band, and bands are deliberately wide because real situations overlap. The sensitivity list shows how far a modest input error moves you along that ladder: for Distributable profit so far, ±10 % covers $7,171,715 to $8,765,429. The practical reading rules: compare against your own history before comparing against other people; treat band boundaries as zones, not walls — one point on the wrong side of a threshold rarely changes a real outcome; and when a companion output contradicts the headline, believe the pair.
Placing this figure in context: calculators of this kind differ less in arithmetic than in what they choose to ignore. This one keeps Preferred return satisfied ($) explicit so that the omissions are visible rather than hidden in a preset.
Common mistakes with Catch-Up Provision (and the fix)
The clause only bites if the hurdle is ever cleared — funds that never return 8% pay no carry, clause or none. This calculator gives an estimate based on standard formulas; it is not professional financial, medical, legal or engineering advice. Verify anything you plan to act on with a qualified professional and your own records.
Stopping at the first plausible answer. If the result surprises you, the productive question is which input would have to be wrong for the surprise to disappear — then go check that input.
One mistake is specific to this engine: assuming every input matters equally. The computation above shows Distributable profit so far dominating — a careful figure there beats false precision everywhere else.
Another is comparing across contexts: a Catch-Up Provision computed with one set of conventions should never be lined up against a figure computed with another. Check the inputs behind both before ranking them.
Before you trust your Catch-Up Provision: a short checklist
- Compare the output against one published benchmark or a colleague’s independent estimate.
- Recompute once with the dominant input deliberately set low, and see whether the decision changes.
- Check Distributable profit so far before anything else: it is the measured dominant input, ≈10.0 % of Catch-Up Provision per ten percent.
- Check that every field the formula needs actually arrived from a document, not from recollection.
- Confirm the example values are plausible for your own situation before replacing them.
- Run the ±10 % stress on the top two levers and check that your conclusion survives both.
Step by step: getting a trustworthy Catch-Up Provision out of this tool
The tool does the arithmetic; the routine below is what makes the arithmetic trustworthy. Five steps, a minute total — and afterwards you will know not just what the number is, but which assumption produced it.
Step 1 — start from evidence. The inputs behind Catch-Up Provision are preferred return satisfied ($), carried interest (%), distributable profit so far ($). Write them down with their source next to each one; if you cannot name where a figure came from, that is the input most likely to be wrong. Note the assumption you are least sure about; that is where the real risk lives.
Step 2 — start from the case you can defend. Enter pessimistic-but-honest figures first; the optimistic run is a ceiling, not a plan. A conclusion that holds on conservative inputs holds everywhere. When in doubt, prefer the boring input: the interesting one is usually the one you misread.
Step 3 — measure what deserves measuring. The ranked levers above tell you where a careful figure pays off. Everything else can stay approximate, which is a licence to stop hunting for data you do not need. Most surprises in numbers are surprises about inputs, not about formulas.
Step 4 — ask what would have to be true. Take the result you want and work backwards through the inputs until you find the assumption that produces it; then decide honestly whether that assumption is defensible. Repeating a calculation with the same numbers proves only that the arithmetic is reliable — which is worth knowing.
Step 5 — record the context, not just the number. Note today’s date and the inputs alongside the $7,968,572 output. Six months from now the context is what turns this figure into a trend. When in doubt, prefer the boring input: the interesting one is usually the one you misread.
The real-world conversations Catch-Up Provision settles
Numbers earn their keep in conversations, and Catch-Up Provision is no exception. In Business & Entrepreneurship discussions around Startup Metrics, this figure decides whether an option stays on the table: it converts an opinionated debate into an arithmetic one, and arithmetic is the only referee both sides accept. Compare the calculation to the rough guess you arrived with, and ask why they differ.
The audience for this page is people who need one trustworthy number before their next decision. In professional Startup Metrics practice the pattern is always the same — screen with Catch-Up Provision, then invest slow analysis only in whatever survives the screen. Most surprises in numbers are surprises about inputs, not about formulas.
Treat Catch-Up Provision like a smoke alarm rather than a painting — its value is in being tested periodically, not in being admired once. Rounding early is the quietest way to introduce a permanent error.
Catch-Up Provision — frequently asked questions
What affects Catch-Up Provision the most?
Measured on this engine, Distributable profit so far is the dominant lever: moving it ±10 % shifts the GP take after pref + catch-up across $7,171,715 to $8,765,429 — about 10.0 % of the headline, with Carried interest next at ≈10.0 %. The ranked list in the sensitivity section is computed live, not asserted from a template.
Do carried interest and distributable profit so far matter equally?
Catch-Up Provision here is co-driven: Distributable profit so far and Carried interest produced ≈10.0 % and ≈10.0 % responses, which is a tie for practical purposes. Everything below those two is a rounding error by comparison.
What is a typical Catch-Up Provision?
With the example inputs on this page the result is $7,968,572, labelled “Catch-up tranche is $5,490,139; GP's share of profit: 20.0%”. “Typical” varies with situation, which is why every result here ships with its verdict band and its sensitivity list: they turn one figure into a range you can locate yourself inside.
How do I calculate Catch-Up Provision by hand?
Use the stated model — 100% catch-up tranche = pref × c ÷ (1 − c); then split pro rata until GP share = c — and substitute in the order the tool prints (it starts from Catch-up = $21,960,555 × 0.20 ÷ 0.80 = $5,490,139). On the example inputs the hand route lands on $7,968,572, exactly what the calculator shows. A spreadsheet reproduces it in two or three cells; doing it once by hand is what makes the automated answer trustworthy.
What happens to Catch-Up Provision if distributable profit so far changes by 10 %?
Try it in the form above and the printed substitution will follow you; the pre-computed answer for the defaults is $7,171,715 to $8,765,429 across the ten-percent probe, i.e. ≈10.0 % sensitivity on the GP take after pref + catch-up.
Is the Catch-Up Provision result of $7,968,572 good or bad?
Neither, on its own — the label “Catch-up tranche is $5,490,139; GP's share of profit: 20.0%” is the band this figure falls in for the example inputs, and your own inputs will place you elsewhere on the same ladder. Judge the number against your history and your alternatives, and remember that a ten-percent error in Distributable profit so far alone moves it by ≈10.0 %.
Can Catch-Up Provision be negative or empty?
Yes, and that is informative rather than broken: a negative Catch-Up Provision usually means the inputs encode an outflow or a shortfall, and the verdict band above labels exactly that situation instead of hiding it.
What affects Catch-Up Provision the most?
Sensitivity depends on where you start, but the inputs Preferred return satisfied ($) and Carried interest (%) typically move Catch-Up Provision further than the rest because they enter the formula multiplicatively. If you can only measure two things well, measure those and hold the others at conservative defaults.
What is 80/20 after catch-up?
Once pref and catch-up complete, remaining profit splits 80% LP / 20% GP — the terminal share.
Can the catch-up be delayed?
Yes — some terms hold catch-up to the fund's liquidation, cutting GP take-early risk for LPs.
Do I need an account to use this Catch-Up Provision calculator?
No, and no data leaves the tab. The engine runs in the page itself, which is why the worked example, the bands and the sensitivity ranking all respond instantly to your keystrokes.
Key terms on this page
- Catch-up tranche size
- $5,490,139 in the default Catch-Up Provision calculation — one of the secondary figures an experienced reader checks before trusting the primary number.
- Distributed to LP
- $31,874,289 for the Catch-Up Provision worked case; it sits next to the main result because it carries context the headline leaves out.
- GP share of total profit
- 20.0 % on the example inputs — a companion figure printed beside the headline of Catch-Up Provision so that no result is read in isolation.
- GP take after pref + catch-up
- The primary output of this tool: $7,968,572 for the default inputs, computed exactly from 100% catch-up tranche = pref × c ÷ (1 − c); then split pro rata until GP share = c.
- Worked example
- The calculation written out in full so that nothing on this page has to be taken on trust.
- Verdict band
- A named zone on the range of plausible results; the example inputs land in “Catch-up tranche is $5,490,139; GP's share of profit: 20.0%”, and your inputs may not.
- Sensitivity (±10 %)
- How far the Catch-Up Provision moves when a single input is nudged ten percent either way; the ranked list on this page is computed live from this engine.
Methodology, sources and limits
Everything above runs on one stated formula, applied without hidden coefficients: 100% catch-up tranche = pref × c ÷ (1 − c); then split pro rata until GP share = c. Source of record: ILPA model LPA language. Specialist software layers extra coefficients on top of the same algebra; none are hidden here, and that transparency is what makes a disagreement traceable to a specific input instead of a black box.
Nothing here replaces a qualified professional, and nothing here is approximate either — the arithmetic is exact, and the honesty is in the inputs you supply. What that buys you is reproducibility — two people, two browsers, the same arithmetic, and a printed trail from inputs to result that either of them can audit.
After the number: what to do with it
Save the number together with its inputs and today’s date; a Catch-Up Provision figure without context is unusable the moment an input changes.
Whoever you are (people who need one trustworthy number before their next decision), the next step is the same: replace the example inputs with your own, note the date, and re-run whenever a figure moves. In Business & Entrepreneurship, a dated figure is a trend, and an undated one is a rumour.