Envy Ratio

The ratio between the price paid by the management team and that paid by the investing institution for their respective share of the equity in a management buyout/in. 

For example if a private equity firm paid $40m for 80% of a company's equity and management paid $3m for 20%, then the Envy Ratio would be 3.33x:

40/80   /  3/20  =  3.33x

I first heard this expression used in London, but it now seems to be catching on in Australia.

Comments

[Ria Day]

Now the value of that equation is going to change with the "carried interest" tax, if it goes through (in the US).

http://www.bizorigin.com/2007/carried-interest-tax-debate-and-why-should-startups-care-2/