Why company valuation matters?
You will need a valuation of company for several occasions. If you would like to give your company shares to your employees, it will be regarded as salary, and you need valuation of the shares. They will have to pay tax on thier income.
On the other side, you will have to pay tax on your capital gain, because it is regarded as sales of your shares for its valuation of the time.
If you are going to issue stock options, you need valuation to keep its strike price higher than the current valuation so that the stock options will be qualified (not taxable when it’s vested and not taxable when it’s excercised).
When you give a part of your company to your family member to prepare your succession plan, you need valuation. It will be regarded as gift.
if you know how how to calculate a company valuation, you will also know how to manuever it. Since there is no public market price unless a company is publicly traded on a stock exchange, there is a room to manipulate the price of stocks.
Typical situation the price goes down is when the net income becomes low. It will also becomes low, if the company does not pay any dividends. The valuation of a company depends on how much dividends it pays, so, you can decide whether you pay dividends this year or next year to make the valuation in a direction you would like to lead.