Managers are often allowed to invest at a lower valuation to make their ownership possible and to create a personal financial incentive for them to approve the buyout and to work diligently towards the success of the investment.
The envy ratio is somewhat similar to the concept of financial leverage; managers can increase returns on their investments by using other investors' money.
This means that the investors paid for a share 2.08 times more than did the managers.
[2] As a rule of thumb, management should be expected to invest anywhere from six months to one year's gross salary to demonstrate commitment and have some personal financial risk.
[3] In any transaction, the envy ratio is affected by how keen the investors are to do the deal; the competition they are facing; and economic factors.