Waterfall Finance Structure
Waterfall Finance Structure
A waterfall finance structure dictates how proceeds from an investment, such as a real estate project or a private equity fund, are distributed among the various stakeholders. It’s called a “waterfall” because money flows sequentially, like water cascading down a series of tiers. Each tier must be fully satisfied before any money can flow to the next. This establishes a clear pecking order for repayment and profit sharing.