Swaroop said increasingly, buyers are willing to pay more for intangible assets such as intellectual capital, brands, distribution strength and technology and know how. "Tangible assets are often a small proportion of the overall transaction value," Swaroop said at a workshop on "Mergers and acquisitions", hosted by the Invest India Economic Foundation in Mumbai on Tuesday.

While listing out various valuation techniques for intangibles, he said there are three fundamental criteria to determine whether an intangible can be valued--its separability, the transferability of ownership and indentifying cash flow streams. Swaroop also laid down key approaches to calculating synergy value.

Earlier, Arthur Andersen country head (corporate finance) Munesh Khanna, in his presentation on "The forces driving mergers and acquisitions", said the underlying principle galvanising all such activity is the "maximisation of enterprise value".

Khanna elaborated on examples of the "growth motive" involved when multinationals like Corn Products acquired Captain Cook while Air Product's buyout of Inox which was essentially backed by an "entry" motive. Indian companies getting into acquisition mode were essentially driven by motives such as: the need to consolidate, backward/forward integration and new business opportunities.