Affiliate marketers, who get paid between 4 and 20% when you sell goods or services over the Internet, can be a source of lost sales, instead of pure gain. They may be offering coupons to lure the customers they refer to your site to other places that sell the same goods or services, but pay them higher commissions. Some work with networks of other sites to drop cookies onto customer’s machines, which operate to attribute your sales to the stuffer’s referral site the next time the customer uses your site. This cost eBay over $20 million in one recent case. Thirteen states require you to collect sales tax if you have affiliates in-state, even if you have no other physical presence to create a nexus for sales tax liability. The New York Times wrote about affiliates recently, and their article contains references to books, discussion forums, and conferences for Internet retailers on effective affiliate program management. See http://nyti.ms/1fPN7lX.
How is this relevant to mergers, acquisitions, and recapitalization? If you lie down with dogs, you get up with fleas. Your buyers, lenders, or investors will run away from any deal where their due diligence reveals fraud. If you are losing sales and profits because of affiliate fraud or affiliation-created sales tax exposures, the price buyers will pay for your business will be reduced.