Waterfall

In a restructuring the waterfall is the order of claims: secured first, then unsecured, then subordinated, then preferred, then ordinary equity. That ordering, applied against the enterprise value, is what identifies the fulcrum security.

In a credit agreement it governs repayments, so a cash sweep applies to the most senior tranche first, working down.

In a private equity fund it means something related but distinct: the order in which proceeds are split between investors and the manager, running capital back, then the preferred return, then a catch up, then the carry split.

In each case the principle is the same, and it is worth being precise about which waterfall is being discussed, since the word carries all three meanings in ordinary conversation.