The acquisition of the two-year old company for $50m (£36.2m) raised a few eyebrows, not least as last week's announcement follows a round of voluntary redundancies which has cut Sotheby's workforce by 5%.
AAP was founded in 2014 by the former chairman of Post-War & Contemporary Development at Christie's Amy Cappellazzo and private advisor Allan Schwartzman, both of whom will now lead a new fine art division within Sotheby's. They will report to Sotheby's chief executive Tad Smith.
In a conference call on January 11, Smith said that the firm had "several lines of business and we are thrilled to add these profitable streams to Sotheby's."
These include:
• Providing advisory services to important clients, helping them to develop and manage their art collections, including both short-term and long-term planning
• Bringing together buyers and sellers of art in private transactions
• Advising collectors on financial, estate, and other aspects of their investments in art
Client List
Asked whether APP were bringing "a unique client list" with them as well, Smith simply replied: "Yes". Existing clients on APP's books are believed to include Dallas-based Contemporary art collector Howard Rachofsky and mining tycoon Bernardo Paz who owns an open-air-art-complex in Inhotim, Brazil.
During the conference call,Schwartzman mentioned that AAP's advisory clients are retained on an annual basis and that their regular payments give the firm a monthly stream of income.
Smith pointed out that the acquisition was "not the first of many" but a strategic move to bring a "new capability to Sotheby's business".
Fine Art Division
At Sotheby's, Cappellazzo and Schwartzman will be joined by Marc Porter, who left Christie's at the end of last year after 20 years where he was chairman of Christie's Americas. The three will now become co-chairman of Sotheby's new-created Fine Art Division with Porter focusing on global business development.
Smith said the Fine Art Division will be principally focused on 20th and 21st century art but also "a good portion of 19th century art". He added: "Our Impressionist, Modern and Contemporary Art departments will form the basis of this new division and, as the division develops over time, it will eventually encompass other key movements of the period, helping us to take a global view of 20th and 21st century fine art."
The latter will reportedly include Latin American and Modern British art.
"Opportunities to Grow"
While it remains to be seen how much this will affect their existing private sales department, the purchase would appear to indicate that they have been lagging behind Christie's in this sector. In the conference call, Smith mentioned that the company has a "strategic drive to increase our worldwide private art sales business".
"Private sales for Sotheby's has opportunities to grow but it was clear that we needed a more coordinated and expert approach in order to achieve the desired results," he added. "Art Agency, Partners will be central to this effort."
Sotheby's share price on the New York Stock Exchange rose by over 7% following the announcement of the acquisition. Shares opened last week at $22 per share, rising to $23.7 by Friday.
£1 = $1.38
Sotheby's / APP deal by numbers
22 - the number of months Art Agency, Partners has been in business
15 - member of staff at APP who are joining Sotheby's
$50m - the price Sotheby's had paid in cash for the company
$35m - the maximum earn-out payments the owners of APP could receive over the next five years
