What are the common strategies that warrant valuation of shares, business or even an undertaking?

Whether it is a case of merger, amalgamation or takeover, valuation exercise is imminent to have an amicable bargaining situation. Business top management, however, have different strategies to resort for valuation. The common reasons could be: Either purely financial such as taxation, asset-stripping, financial restructuring involving an attempt to augment the resources base and portfolio-investment; Business related expansion or diversification; or The behavioural reasons have more to do with the personal ambitions or objectives of the top management. The expansion and diversification objectives are achievable either by building capacities on one's own or by buying the existing capacities. In other words 'make' or 'buy' decisions. The decision criteria in such a situation would be the present value of the differential cash flows. These differential cash flows would, therefore, be the limit on the premium which the acquirer would like to pay. On the other hand, if the acquisition is motivated by financial considerations, the expected gains through taxation or asset stripping would form limit on the premium, over and above the price of physical assets. Cash flow from operations may not be the main consideration in such a situation. A merger with financial restructuring as its objective needs to be valued mainly in terms of financial gains.