Bridger PenningtonFund Launch & Investment Expert

Did You Know There's a Difference Between American and European Waterfalls?

17 Jan 2023 · 0 min

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American waterfalls in debt funds calculate fees and carried interest deal-by-deal, rewarding quick exits. A one-month investment returning 10% generates a partner bonus 120% higher than under the European model, which spreads calculations across the fund's lifetime.

What's the difference between American waterfall and European waterfall? So American waterfalls are deal-by-deal basis. So if you want to do that in your debt fund, you grab the money until we deploy into a deal, then all the counters start, the fees and the man— only when the money is deployed and for the time it's deployed. The money comes back for that deal and then you're done. Which actually is really good for debt funds because if you do a deal that takes you 1 month and you make 10%, that's a 120% higher partner bonus.