b'How to Legally Raise Private Moneyoffering, management will typically earn between 20% and 50% of the distributable cash generated from operations or sale of an asset. This may be paid as a direct split between the investors and the management team, or as a preferred return. Payments of distributable cash are called distributions. The description of how funds are disbursed is called the waterfall. A typical syndication has three or more phases and a waterfall for paying its members. Below are some examples of waterfalls in the various phases of a typical syndi-cation, although there are many variations depending on what you are syndicating. Waterfalls in a syndication can be quite simple or very com-plex. We will cover simple waterfalls as thats where most beginning syn-dicators will start.Acquisition PhaseIn the acquisition phase, you will raise funds from investors. Manage-ment may take a distribution or earn an acquisition fee (also called an organization and due diligence fee) on achievement of some milestone, such as hitting a target raise amount or acquiring an asset for the compa-ny. The acquisition fee may be based on the amount of funds raised or the purchase price of the asset, or a fixed fee. Operations PhaseDuring this phase, you are operating the company. If there is cash flow from the asset, it may get distributed like this:First, you will pay the property or company operating expenses; including any syndication asset management fees to which you may be entitled.Second, you will make institutional loan payments.Third, you will make payments to investors.Fourth, you will make payments to yourself.The order of distribution you decide to use during your companys op-erations may vary from this, but generally, your investors will want their share of profits before management takes its share, and you will establish a specific order in which distributable cash gets distributed in the compa-nys governing documents.84'