IRR, MOIC and carried interest on an $8.4 billion take-private, from exit value to the LP's net

Permira and Warburg Pincus took Clearwater Analytics private on June 25, 2026, at $24.55 a share, with $5.74 billion of equity. The LBO model builds the deal on management’s plan and on an outside-in case. This page follows the equity from exit to the LPs: what the business is sold for, what is left for equity, who gets it, and what the fund’s investors keep.

• MOIC: cash returned divided by cash invested, with no time value.
• IRR: the annual rate at which the equity cash flows net to zero, so it rewards a shorter hold.
• Carried interest: the general partner’s share of the fund’s profit, paid through its distribution waterfall.
• TVPI and DPI: the LP’s distributions plus remaining value, and distributions alone, each over capital paid in.

The exit assumptions

Both cases sell at the end of 2030, 4.5 years after close, at the multiple paid: 25.0x next-year EBITDA on the outside-in case and 24.8x on management’s plan. The cases differ in the EBITDA the multiple is applied to: $636 million against $897 million.

The exit metric is next-year (2031) EBITDA because the entry multiple was struck on next-year (2026) EBITDA; pricing both ends on the same basis keeps a growing business from earning a return from the change in basis alone. Holding the multiple flat is the conservative choice for a business bought at 25x: a buyer in 2030 paying less is the main risk to the return, which the sensitivity analysis prices.

From exit EBITDA to the sponsors’ proceeds

On the outside-in case, $636 million at 25.0x is a $15.9 billion enterprise value; $2.3 billion of net debt leaves $13.6 billion of equity, 2.37x the $5.74 billion invested and a 21.1% IRR. After the management pool, the sponsors keep $13.0 billion: 2.26x and 19.8%.

Revenue growth creates 78% of the gain on the outside-in case and margin 17%; debt paydown adds only $315 million, because the free cash flow mostly pays interest.

Should the model assume a management incentive plan?

Yes. The proxy commits the buyer to a management equity program, so a returns model that leaves it out overstates the sponsors’ share: an illustrative 8% of the value created takes $630 million at a 2030 exit on the outside-in case and 1.3 points of IRR.

Management rolled no equity: the executives’ closing Form 4s show every share and award disposed of at $24.55. Shares, options and vested awards were paid in cash at closing; unvested RSUs and PSUs, part of the $197.9 million of such awards company-wide, became cash awards paid as they vest. The merger proxy says only that Parent agreed to set up “a customary long-term equity-based incentive program” for key employees after closing, with its terms not yet determined. The model assumes a pool of 8% of exit equity value above the sponsors’ invested equity, vesting over five years and accelerating on a sale. Because it shares in value above cost, it costs more in the better case: $1.17 billion and 1.7 points of IRR on management’s plan.

Returns by investor

Four investors fund the $5.74 billion, Permira 44% and Warburg Pincus 31%. With no rollover and one class of equity, each earns the same 2.26x and 19.8% after the pool on the outside-in case; Permira’s $2.50 billion returns $5.67 billion.

The model funds $5.74 billion of equity and pays $7.44 billion to shareholders at closing, against about $5.7 billion and $7.4 billion in the closing 8-K. The equity price is $7.64 billion; the gap is $197.9 million of unvested RSU and PSU cash awards that the merger agreement pays as they vest after closing, so the company, not the sponsors’ equity, funds them, inside the stock-based compensation the model already treats as a cash cost.

When to sell

MOIC keeps rising but each extra year earns less: on the outside-in case the year to 2029 returns 15.9% on the equity left in and the year to 2030 returns 14.6%, below the 21.1% the deal earns to 2030.

On management’s plan the marginal year stays above 20% through 2031, so the case for holding rests on which plan the sponsor believes. On the outside-in case, every year after 2027 earns less than a 20% target on the equity left in, which argues for an earlier sale if a buyer pays the same multiple.

The fund’s waterfall

On the outside-in case, $12.99 billion of proceeds pays the LPs $11.65 billion and the GP $1.33 billion of carry, exactly 20% of the fund’s profit. Deal by deal, the GP would take $115 million more at exit and return it through the clawback.

• European (whole-fund): LPs get back all paid-in capital, including the $576 million of management fees, and an 8% preferred return on it before the GP’s catch-up starts.
• American (deal-by-deal): each deal returns its own capital and preferred return first, so fees are not repaid before carry. The GP is paid earlier and owes the excess back at fund wind-up through the clawback.
• Fund terms, all illustrative: a 2% fee on $6.37 billion of commitments through a five-year investment period, then on invested capital; an 8% preferred return compounding from each contribution; a 100% catch-up; 80/20 above it. The deal is treated as the fund’s only investment, so the American clawback returns the GP exactly to the European result.

Gross to net

The 21.1% gross IRR becomes 15.0% for the LPs on the outside-in case: carry takes 286 basis points, fees 194 and the incentive pool 126. On management’s plan, 32.4% becomes 24.7%.

Carry takes a larger share of the spread in the better case, 413 of 772 basis points on management’s plan, because it is a share of profit; fees are fixed in dollars and cost less as the return rises.

The LP’s view: TVPI, DPI and the J-curve

The LP pays in $6.31 billion before seeing a dollar back: TVPI rises on marks from 0.99x at close to 1.64x by 2029 on the outside-in case, but DPI stays at zero until the 2030 exit realizes 1.85x.

The J-curve is the cumulative net cash line: fees and capital calls push it down to ($6.31 billion) in 2029, and the single exit distribution lifts it to $5.34 billion on the outside-in case. TVPI does not dip below 1.0x after closing because the residual value is marked to the LBO’s implied equity value each year; a fund carrying the deal at cost until exit would show the J-curve in TVPI as well.

Computing the IRR in Excel

Every IRR on this page is XIRR on the actual dates: equity in on June 25, 2026 and proceeds out at the year-end exit. Excel’s IRR() treats each column as a full year, so it counts the six-month stub to December 2026 as a year and understates the 2030 return by 220 basis points, 18.9% against 21.1%. Without leverage, the deal earns 18.1% on the outside-in case and 27.3% on management’s plan, so the term loan adds 3.0 and 5.2 points.

Methodology. Exit values, debt and the sponsors’ equity come from the LBO model for both cases, each exiting at the multiple paid on its own 2026 EBITDA (25.0x outside-in, 24.8x management), and tie to it with no difference at every exit year. Equity commitments, the treatment of unvested awards, the absence of a management rollover and the incentive program’s existence are from the merger proxy (DEFM14A, April 8, 2026), the executives’ closing Form 4s and the closing 8-K. Everything about the fund, and the incentive pool’s terms, is illustrative and labeled in the workbook: Clearwater’s sponsors do not publish their LPAs. The model was built in Compound; it rebuilds work a deal team or fund could have done and is not the buyers’ or their funds’ numbers.

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