This feature enables fund managers to calculate key inputs to quarterly reports by allowing users to:
Calculate allocations of ending NAV per LP
Run a hypothetical waterfall to calculate unrealized
Calculate fund and LP performance metrics
Overview
Hypothetical waterfalls are quarterly calculations that illustrate what would happen if the whole fund was liquidated on a certain date. Unlike cash waterfalls, which are run on actual cash events that have occurred, hypothetical waterfalls combine actual cash events with unrealized (pre-carry) asset values. This allows fund managers to issue quarterly financial statements to each LP that include the carry amount that would be taken by the GP.
These inputs also flow into quarterly performance metrics calculations that your organization has configured in Maybern, such as Gross and Net IRR.
How-To
Create a Hypothetical Waterfall
Navigate to Financial Reporting
From within a fund family, select the Financial Reporting tab in the sidebar navigation
Set up the Hypothetical Waterfall
Click on Run Hypothetical Waterfall
Choose between:
Run Actual Hypothetical Waterfall: Runs calculations for the current quarter. This is often useful for generating official records for quarterly reporting.
Run Estimated Hypothetical Waterfall: Runs calculations for an effective date of your choosing. This is often useful for internal scenario analysis, and allows you to run hypothetical waterfalls before your quarter-end P&L has been finalized.
Enter the Net Asset Value Components
Enter the fund entity level NAV data.
NAV components displayed here are configurable for each fund family.
You can view the allocation rules and bases being used to allocate PnL across investors by clicking on the fund structure icon in each cell
Maybern will automatically pull in management fees, contributions, and distributions within the system that are finalized up to the effective date.
Review Inputs
View how PnL inputs flow through the fund structure
Run the Hypothetical Waterfall
Click Run Draft Hypo Waterfall to kick off the calculation based on the fund’s configured allocation rules and waterfall tiers
Review the Results including
Investor NAV: P&L allocation and ending NAV by investor, viewable quarter-to-date, year-to-date, and inception-to-date
Waterfall Details: tier-by-tier breakdown of the waterfall
Performance: performance metrics e.g. IRRs, multiples, etc. at the fund entity, investor class, investor, and commitment levels.
Finalize the Waterfall event
When ready, click Finalize in the upper right corner
View Historical Hypothetical Waterfalls
Navigate to the Financial Reporting tab
Scroll through the list of previous quarters with finalized hypothetical waterfalls
If a quarter has both an actual and an estimated waterfall, you will find both listed under the given quarter.
Click on any past waterfall to review its details
Tips & Tricks
Finalize All Capital Activity First: Before running a hypothetical waterfall, ensure all capital activities (calls, distributions) within the period are finalized. The system will warn you if any draft activity exists.
Download LP Breakdown Report: Use this export function on the “Financial Reporting” page to generate waterfall reports for each LP.
Download Audit: Use this export function on the “Hypothetical Waterfall Event” page to generate an audit spreadsheet for the waterfall on view.
Configure Performance Metrics: Configure custom performance metrics to show up in the Performance tab by classifying that calculation as a “Hypothetical Waterfall Metric”
Roles & Permissions
Admin: can create and finalize hypothetical waterfalls
Power: can create and finalize hypothetical waterfalls
User: can create hypothetical waterfalls, but cannot finalize
View Only: can view hypothetical waterfalls
Need Help?
Reach out to your Maybern Point of Contact or in the UI via chat