American-style distribution waterfall in which carry is paid on a deal-by-deal basis — each realization is evaluated against the capital invested in that specific deal, and once the deal returns capital plus preferred, the GP receives 20% of incremental distributions from that deal. GP-favorable relative to European (whole-fund) waterfalls because the GP can receive carry on early winners while the rest of the fund is still negative. Requires a robust clawback mechanism (often with GP escrow) to prevent overpayment of carry — interim checkpoints at end-of-investment-period mitigate the risk. U.S. middle-market historically used American; institutional U.S. and European funds have largely shifted to European. Persists in some venture funds and older vintages.