Fees and waterfalls

Overview

A fund pays management fees from its first day of operations, so the fee engine is core infrastructure, not an add-on. Fee and expense-allocation runs are versioned calculation runs with a preparer, a reviewer, and an approver, and a fee run ties out to an Excel workpaper — because a fee calculation nobody can reproduce is not a fee calculation an auditor will accept.

The management fee engine

The fee engine supports these levers today:

• Fee base — committed, called, invested, or NAV
• Fee rate and period proration
• Investor-specific side-letter terms — a rate or base override, a discount, or a full fee waiver

Side-letter terms are stored as structured rules rather than a note in someone’s inbox, and a rule must be approved before it is allowed to affect a calculation.

Not yet available: step-downs at the end of the investment period (a fee schedule carries a single rate for now), targeted and fund-level fee waivers, and fee offsets for transaction, monitoring, and placement fees.

Expense allocation

Fund and organizational expenses allocate across LPs by commitment, ownership, NAV, or deal participation, with broken-deal tracking for costs incurred on deals that never closed. A custom allocation basis, expense caps, and organizational expense caps are not yet available, and an expense-allocation run has no Excel workpaper yet.

Waterfall and carry guidance

This is the one place in the platform where the boundary between “calculation” and “guidance” matters most, so it is worth stating plainly: NAVdryx does not produce a final carry number that drives journal entries, LP statements, or distribution notices. A fund’s waterfall terms — whole-fund or deal-by-deal treatment, and the tier cascade of preferred return rate, GP catch-up, and carry split, with the governing-document clause each tier comes from — are entered on the fund’s waterfall page and must be approved by a person before guidance can use them. For whole-fund terms, you can enter a hypothetical or planned distribution amount and see the expected allocation rendered tier by tier, with the clause recorded for each tier cited alongside it.

Guidance output includes:

• Illustrative distribution allocation by tier
• Total allocations to LPs and to the GP at that distribution amount

Not yet available: reading waterfall terms from extracted governing documents (they are entered by hand), escrow holdback, per-LP carry exceptions, cumulative carry earned to date on a realized and an unrealized basis, and a forward look at when carry is expected to begin.

Every guidance output carries the label “NOT A FINAL CALCULATION — illustrative guidance only”; the label does not yet name the source document and section. Final carry, distribution allocation, and journal entries are still calculated and approved by the fund accountant or third-party fund administrator, outside NAVdryx, until the deterministic waterfall engine ships — deliberately sequenced after the management fee engine has been validated against several quarters of live fund data. Until then, guidance output exists to support GP, finance-team, and LPAC discussions — it cannot be promoted to a journal entry, included in an LP statement, or used as the basis for a distribution notice.