How private equity gets paid comes down to the distribution method, investment period, allocation of management fees, clawback clause, and deferred distributions. When dealing with a fund, one of the most important aspects is the distribution method.

Real estate development projects usually demand significant amounts of capital up front which makes it difficult for developers to fund 100% of the capital with their own equity. In order to meet these financing needs, developers utilize a combination of equity and debt financing.

One of the leading sources of error in the private equity world is waterfall calculations. Waterfall calculations are governed by dense legal documents, and the calculations often differ from traditional finance methods.