Malpas was offered the role of manager at Caley Thistle after Butcher told chairman Kenny Cameron he was destined for Easter Road.
But the former Dundee United and Scotland defender turned down a wage rise in order to become Hibernian assistant manager because he could not resist the temptations on offer in Leith.
"I came to a club that has got everything that I want," Malpas said. "The training facilities are second to none, the stadium is as good as anything in Scotland, a crowd base that we are determined to grow, and a club that has got bags of potential.
"People have been saying that for a few years now but we are determined to come here and achieve something.
"They have been in a couple of cup finals. We are determined to get the league position better. It was just something I couldn't say no to."
Inverness are second in the Scottish Premiership and Malpas would have had a League Cup semi-final against Hearts to look forward to.
Hibs sit seventh and were knocked out of that tournament by Hearts in a defeat that sparked the end of Pat Fenlon's reign. They have lost four games in succession and have finished in the bottom six three years running.
But Malpas felt he could go one step backwards to go two steps forward.
The 51-year-old said: "The chairman, Kenny, came up to the house on Thursday evening and I had a couple of hours' conversation with him.
"I can't speak highly enough of the (Inverness) directors, they have given us everything we have asked for.
"But I said to him: 'You can't give me a training facility like here, you can't give me a stadium like here, that's buzzing with 15-16,000. You can't give me the potential we have got here.'
"Short-term Caley Thistle have got a better chance of winning a trophy. But long term, Hibs are far better."
Malpas and Butcher have enjoyed success at Motherwell and Inverness but both struggled apart in between, Malpas as boss of the Lanarkshire side and Swindon.
And the chance to continue working with the former England captain won over the temptation of being his own man again.
"I did think about it but we went to Inverness together as a pair," he said. "We work well together. I enjoy working with Terry and professionally this was the move for me.
"Financially, I would have been better staying up at Inverness, but that never came into my mind. It was always the professional side and football side that outweighed what I was going to get up there."
His last contribution to Inverness following almost five years in the Highlands was to lead the team to a 2-0 win at Easter Road on Saturday as Butcher sat in the stand amid the uncertainty over his future.
And Malpas admitted it was the most difficult afternoon of his career.
"I just went on automatic pilot," he said. "We got the pre-match meal, did the team talk, Richie Foran helped me with the team talk, and then just got immersed in the game.
"I took the warm-up, as I normally do, mainly because I didn't want to be sitting about. The game flew in for me.
"It was after the game I found really difficult, saying cheerio to the players.
"I was determined to say goodbye to them. I had to show them the respect they deserved.
"But that was tough. The toughest thing I have had to do in football, without a shadow of a doubt.
"That was something I wouldn't like to do too often."
- Sports & Recreation
- Terry Butcher
- Caley Thistle