The third tier of a European-style waterfall, executed after LPs have received return-of-capital (Tier 1) and the preferred return (Tier 2). The catch-up allocates distributions to the GP until cumulative GP profit equals 20% of cumulative profit overall — 'catching up' to the GP's target carry share before the 80/20 split begins. Algebraically with a 100% catch-up: if LP cumulative profit at end of Tier 2 is L, the catch-up amount x satisfies x = 0.20(L+x), giving x = L/4. A 50/50 catch-up requires x = 2L/3 — twice as much distribution to reach the same target, slower carry to GP. The catch-up structure affects WHEN the GP receives carry but not the ultimate 80/20 split (which equilibrates at full liquidation).