medium · Private Equity paper-lbo
In the context of an LBO, what is the 'Envy Ratio' used to measure?
- The spread between the cost of senior debt and the cost of subordinated mezzanine tranches within the capital stack.
- The amount of leverage employed relative to comparable peer transactions closed recently in the same industry.
- The ratio of the entry multiple paid to the exit multiple realized at the time of sale.
- The relative attractiveness of management's potential equity return compared to the sponsor's return.
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