[forkLding]

Business valuation is usually a multiple (3x, 5x, 10x) multiplied by a certain metric such as revenue, net income (can be before tax and interest) or free cash flow with considerations for growth. [Can also include current market cap if they're public or previous estimated valuations as benchmarks]

Plus or minus any assets that can be made liquid/sold for cash which haven't been depreciated totally or can be still used by the new company.

Strategic considerations also factor in customer/user base, current relationships with buyers/suppliers, technical know-how and market share which can boost or decrease the valuation.

Liabilities and the general riskiness of the transaction/merger such as debt can also factor in, so a financially healthy company is worth more.

After all that, it will depend on negotiating power/how much SirusXM wants Pandora and if there are also other potential buyers bidding for the company. If say Apple Music started bidding for Pandora, SiriusXM and Apple Music could keep one-upping each other so that the price increases.

You can google things like Enterprise Value, Discounted Cash Flows, etc. but they're a bit advanced and based on the principles I've mentioned.