Late closers calculated correctly, automatically
A new LP commits $2M at your second close. Now you need to calculate their equalization payment — catch-up capital for prior calls, interest on those amounts per your LPA, and retroactive management fee adjustments. Get it wrong and you're either short-changing existing LPs or overcharging the new one. Archstone handles the math so you don't have to.
Start your free trialYour LPA says late closers must equalize with first-close investors by paying their pro rata share of prior capital calls plus interest at the prime rate plus 2%. Sounds simple enough — until you realize the first close had two capital calls at different amounts, management fees were charged quarterly in advance, and the interest compounds from each original call date to the equalization date. Most GPs build a spreadsheet, triple-check the math, and still aren't confident.
The complexity multiplies with each subsequent close. A third-close LP needs to equalize not just with first-close investors but also with second-close investors who already paid their own equalization. The amounts cascade, the interest periods differ, and the capital account adjustments ripple across every existing LP. This is where spreadsheet formulas break and fund administrators earn their fees.
Archstone's equalization engine reads your LPA terms, tracks every prior capital call and its date, applies the correct interest rate and compounding method, and produces a clean LP-by-LP breakdown that your auditor can verify in minutes. The late closer sees exactly what they owe and why. Existing LPs see exactly how their capital accounts are adjusted. Everyone's subscription agreement obligations are met precisely.
When a new LP joins at a subsequent close, Archstone automatically calculates their catch-up payment based on all prior capital calls. The system knows which calls happened, how much was drawn, and each LP's pro rata share — producing the equalization amount without manual computation or error-prone spreadsheet formulas.
Configure your LPA's equalization interest terms — fixed rate, prime plus spread, SOFR-based, or any custom formula. Interest accrues from each original capital call date to the equalization payment date. The system handles day-count conventions, compounding frequency, and rate lookups so the interest calculation matches your partnership agreement exactly.
When a late closer equalizes, existing LPs' capital accounts need retroactive adjustment. Their ownership percentages change, their share of unrealized gains shifts, and management fee allocations may need true-up. Archstone recalculates every existing LP's capital account to reflect the new investor's entry — maintaining waterfall integrity across the partnership.
Every equalization calculation produces a detailed breakdown showing each LP's position: the late closer's total equalization payment with line items for each prior call and interest component, plus every existing LP's adjusted capital account balance. Transparency at the individual LP level eliminates questions and builds trust with your investor base.
Export the complete equalization workpaper — inputs, methodology, intermediate calculations, and final amounts — in a format your fund auditor can review directly. No more recreating the calculation in a separate document for audit purposes. The documentation includes references to your LPA sections and the specific terms applied to each computation.
Review the full equalization calculation before any capital call notices go out or capital accounts are adjusted. See the late closer's total payment, the interest component, the per-LP adjustments, and the post-equalization ownership table. Approve the calculation, then Archstone generates the notices and updates the books in one atomic operation.
Your fund had its first close six months ago and called capital twice for investments plus organizational expenses. Three new LPs join at the second close. Archstone calculates each late closer's equalization payment — their pro rata share of prior calls plus interest — and adjusts existing LP capital accounts to reflect the dilution. Clean, auditable, and done in minutes.
A third-close LP needs to equalize with both first-close and second-close investors — but second-close investors already paid their own equalization. The calculation cascades across closing dates, interest periods, and prior adjustments. Archstone handles the compounding logic automatically, producing a result that accounts for every prior transaction in the fund's history.
Late closers owe their share of management fees from the fund's inception — not just from their closing date. Archstone calculates the retroactive management fee component separately, accounting for any fee ramp provisions in your LPA and side letter fee reductions. The true-up amount flows into the equalization payment as a distinct line item for full transparency.
The calculator supports fixed rates, prime plus spread, SOFR-based rates, and custom formulas. You configure the rate and compounding method to match your LPA terms exactly. For variable rates, the system looks up the applicable benchmark rate for each accrual period automatically. Day-count conventions (actual/360, actual/365, 30/360) are fully configurable.
Each subsequent close layers on top of prior equalization events. A third-close LP equalizes with the post-second-close capital accounts — meaning the system accounts for second-close equalization payments already made. The cascading math is handled automatically, and the audit trail shows the full chain of calculations from first close through the current event.
You configure the calculator with your specific LPA provisions — interest rate, compounding method, fee treatment, and allocation methodology. The system applies exactly the terms you specify. We recommend having your fund counsel review the initial configuration to confirm it matches your partnership agreement. Once set, the terms apply consistently to every subsequent close.
Per standard fund accounting, equalization interest is typically distributed to existing LPs pro rata based on their capital accounts at the time of the subsequent close. Archstone calculates each existing LP's share of the interest payment and records it as a distribution in their capital account. The treatment follows your LPA provisions — some funds treat it as income, others as a return of capital.
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