Promote
Quick answer
A promote is the share of profits a sponsor earns above its pro-rata equity contribution once investors have received their preferred return.
Promote, also called carried interest, aligns the sponsor with its equity partners. A common joint-venture waterfall pays an 8% preferred return to all capital, returns capital, then splits residual profits 70/30 or 80/20 in the investor's favor, with the sponsor's share stepping up as IRR hurdles are met.
Related product: JV Equity
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