A split and a waterfall both describe the process of distribution of investment returns after the preferred return is already paid out. For example, if the split is 70% then 70% goes to the limited partner and 30% goes to the sponsor. All other proceeds from distributions or capital events (after the preferred return) would see a 70/30 split. However, the split may change if a hurdle, or “waterfall” is overcome. For example, a split may be 70/30, but then go to 50/50 once the IRR hits 16%. In which case, any returns above and beyond 16% would follow a different split, say 50/50, with 50% going to the limited partners and 50% going to the sponsor after a waterfall.