What Does Envy Ratio Mean?
Envy ratio is the ratio between the price paid by private equity investors and the price paid by management for their respective shareholding interest. It is used in a leveraged buyout to show how much the management spent compared to the investing company, in proportion to the value of the equity that each party received. It works to show which group paid more per share.
It is calculated as follows:
Envy Ratio = (investment by investors / % of equity) / (investment by management / % of equity)