A self-made billionaire from Michigan whose fortune came from shopping malls, real estate and root beer, Taubman purchased the auction house in 1983.
He acquired Sotheby's for a reported $125m at a time when the company was loss-making and struggling financially. As chairman of the company, his approach to break away from traditional auctioneering, where dealers were the main clients, and move towards art retail effectively created the modern auction house.
Under his watch, the company developed a much larger private clientele with glossy catalogues, credit services and vendor guarantees introduced. He also oversaw the development of Sotheby's premises in New York's York Avenue into their grand saleroom and gallery space that exists today.
In 1988, Sotheby's went public and the company's shares were listed on the New York Stock Exchange (the firm became the oldest publicly traded company on the NYSE). At this time, their auction totals were running high and ahead of rivals Christie's, although inside the company there major concerns about the state of their profit margins.
Sotheby's and Christie's upped their buyer's premiums to 15 per cent (charged on the first £30,000 of any purchase) within weeks of each other in 1992, while in 1995 the two houses equalised their rates for sellers of goods priced between £60,000 and £3m.
In early 2000, news emerged of investigations into alleged price-fixing and anti-competitive practices not just in the US but also in the UK, Europe and Australia. Taubman resigned as chairman of Sotheby's in February at the same time as chief executive Diana 'Dede' Brooks quit the company.
Brooks would later plead guilty to price-fixing in a Manhattan Federal Court where she implicated Taubman, saying in court: "At the direction of a superior, I had a number of meetings and conversations with a representative of Christie's International in which, among other things, I agreed to fix prices with respect to the commissions charged to sellers."
Despite strenuous denials, 77-year-old Taubman was later convicted in Federal District Court in New York of criminal charges of collusion and handed a ten-month prison sentence as well as a $7.5m fine.
Sotheby's was fined $45m by prosecutors, while a separate $512m settlement was handed down on Sotheby's and Christie's following a class action lawsuit by aggrieved clients.
Taubman finally sold his controlling interest in Sotheby's in 2005.
For Taubman, owning the auction house was always just one part of his business empire. His pioneering development of the modern shopping malls helped him to build up a $2bn fortune according to Forbes magazine, while his real estate company, cinemas and ownership of A&W root beer made him one of the leading entrepreneurs in the US.
He was known to collect Old Masters and Impressionist paintings, some of which were kept in his apartment overlooking Central Park. He also had homes in Palm Beach and London.
After winning the takeover battle for Sotheby's against the owners of General Felt Industries, he was widely quoted as saying: "Selling art has much in common with selling root beer. People don't need root beer, and they don't need to buy a painting, either. We provide them a sense that it will give them a happier experience."
While Taubman's reputation was dented by the price-fixing scandal, he will also be remembered in the US as a philanthropist who donated hundreds of millions of dollars to universities, hospitals and museums.
He is reported to have died of a heart attack.