Explain the envy ratio and sweet equity in a management equity package, and what they tell you about alignment.

In a buyout, management typically invests alongside the sponsor but on terms that give them disproportionate upside if the deal succeeds — 'sweet equity'. The envy ratio measures this: it's the effective price the sponsor pays per share of ordinary equity relative to the price management pays, i.e., how much more the institution pays for the same ordinary equity. A higher envy ratio means management gets their ordinary (sweet) equity cheaply relative to the sponsor, who funds most of the structure through shareholder loans/preference shares that rank ahead. The structure aligns incentives: management's sweet equity is geared, so they only make real money once the sponsor's loan/preference is repaid and a return cleared — strong upside for outperformance, but they're junior, so a mediocre outcome leaves them with little. It tells you how aggressively management is incentivized and how the value splits.