A European waterfall distributes performance fees on a(n):
- deal-by-deal basis and is more advantageous to the general partner than an American waterfall.
- deal-by-deal basis and is more advantageous to the limited partners than an American waterfall.
- aggregated fund level and is more advantageous to the limited partners than an American waterfall.
Answer will be option C. In European waterfall distributes performance fees on aggregate basis that is GP is only paid incentive fee once LPs get their initial capital and hurdle rate is meet by GP. Hence this european distribution is benefical to LPs as compare to american waterfall where performance fee is given deal by deal basis.
I hope it helps.