The Back Room: Private Parties

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This week in the Back Room: some likely parameters of Perrotin’s private equity partnership, Jordan Wolfson’s lonely view of success, mapping the proliferation of private museums, and much more—all in a 7-minute read (1,069 words).

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Top of the Market

Art Market M&A

A photo of Emmanuel Perrotin in 2013 under a Paola Pivi bear, Who Told You White Man Can Jump?. Photo: Guillaume Ziccarelli, courtesy of Perrotin Gallery.

A photo of Emmanuel Perrotin in 2013 under a Paola Pivi bear, . Photo: Guillaume Ziccarelli, courtesy of Perrotin Gallery.

Most art professionals know by now that Emmanuel Perrotin is in exclusive negotiations to sell a 60 percent equity stake in his namesake international gallery to Colony IM, a Paris-headquartered private-equity and real-estate-management firm.

But to understand what the sale might mean for either Perrotin himself or the dealer sector at large, we need to update our art-market priors on the nitty gritty of mergers and acquisitions.

That’s what Tim was up to in this week’s Gray Market. While the M&A specialists he talked to could only speculate, their experience in the field nevertheless sheds some much-needed light on what Perrotin and Colony might be hashing out in their closely guarded negotiations.

The novelty of the proposed transaction seems to lie in the fact that Perrotin (the founder) will retain operational and strategic control despite selling off a majority interest in Perrotin (the company). It sounds nonsensical to many, if not most art pros, but it’s elementary to M&A veterans.

 

How the Arrangement Could Work

  • Since Perrotin is a privately held company, the deal could establish a bespoke corporate structure that separates strategic control and financial control.
  • Galleries in 2023 are still what one source called a “human capital business” that relies on reputation and relationships—meaning an outside investor benefits from keeping a founder like Emmanuel Perrotin on board.  
  • Deal terms probably incentivize the founder and his team to outperform financially—and soon—while allowing them to retain broad operational and creative authority.
  • Yet Colony might hold “special rights and vetoes” over extraordinarily costly or consequential decisions to help protect its investment.

 

What Perrotin Gets From the Deal

  • A serious injection of liquidity, which a gallery spokesperson told would help Perrotin by “accelerating its international deployment and developing in new activities,” including…
  • A strengthening of its offerings of “derivative products” (presumably meaning editions and artist-licensed merchandise), its nascent resale operation, and its potential acquisition of “‘white label’ galleries”—a retail-sector term for when one company buys another’s products outright and rebrands those products as its own.
  • Easier access to additional financing, since institutional investors like Colony (now also a stakeholder in the gallery) tend to get the best terms due to the size and frequency of their dealmaking.

 

But the bigger question is whether the pact makes as much sense for Colony as it might for Perrotin. Consider…

 

The Caveats on Colony’s Side

The typical private-equity game plan is to invest, maximize profit during the so-called hold period (usually, of two to five years), and then “exit,” as they say. That means Colony needs to identify a buyer for its stake in the (if all goes well) supersized, super-profitable Perrotin in just a few years. At that point, M&A specialists wonder…

  • Does Perrotin himself retain some influence over the selection of the next buyer, at least under certain conditions?
  • Either way, would he retain operational control if he ultimately doesn’t see eye-to-eye with the subsequent investor?
  • What if the art market has a rough couple years, forcing Colony to write down its investment? Would that leave the gallery on shaky footing with lenders?

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The Bottom Line

While there have long been whispers of private investors backing major galleries, Perrotin’s negotiations with Colony mark the first time the parties involved have gone public with their arrangement. That fact alone makes this deal both an unusually bold reflection of the art trade’s financialization and global growth ambitions in the 2020s, as well as proof positive that it has entered a new era.

But it also clarifies that the more (and the more creatively) the industry expands, the less equipped traditionalists will be to even understand what they’re up against. Assuming, that is, this unusual alliance pans out.

[Read More

 

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Paint Drippings

Wet Paint is on hiatus this week, as our trusty scribe gets some well deserved post-Basel R&R.

Here’s what else made a mark around the industry since last Friday morning…

 

  • Art Fairs
    • Independent 20th Century announced the 30+ galleries and nonprofits exhibiting in its second edition, which returns to Cipriani South Street from September 7–10. The list includes Garth Greenan, Karma, Vito Schnabel, and S94 Design. ()
    • Photofairs publicized the 61 exhibitors and associated programs for its inaugural New York expo at the Javits Center from September 8–10. Alongside its booth presentations, the fair will welcome a range of special projects, large-scale installations, and publishing ventures by partners including Baxter St at the Camera Club of New York, Fotografiska, and Gagosian Quarterly. ()
    • Couldn’t make it to the opening of the Treasure House Fair, the new cross-category expo speedily organized to fill the void left by the cancelled Masterpiece London? If so, the intrepid Vivienne Chow has you covered.(Artnet News)

     

    Auction Houses

    • Christie’s will auction 30 works from the collection of Anne and Wolfgang Titze in Paris on October 19 to coincide with the second edition of Paris+. The lineup—which the house calls a “marginal part of” the couple’s holdings— hopes to bring at least 20 million ($21.9 million). ()
    • British fashion designer Paul Smith is selling a Banksy painting, titled (2004), at Bonham’s London on June 29, with a high estimate of £1.8 million ($2.3 million). ()
    • Sotheby’s raked in another $11 million in its latest sale of NFTs from the bankruptcy estate of 3 Arrows Capital, though $6.2 million of that total came from the sale of one work by Dmitri Cherniak. (Artnet News)

     

    Galleries and Biennials

    • Hauser and Wirth now represents Flora Yukhnovich in collaboration with Victoria Miro. Yukhnovich’s first Hauser solo show will be held in Los Angeles in 2024. ()
    • The next edition of the Berlin Biennale has been postponed to 2025 due to “organizational delays” caused by the pandemic—a shift that the organizers also hope will prevent the event from getting lost in a biennial-packed 2024. ()
    • In gallery personnel news, Gagosian tapped veteran institutional curator Joshua Chuang to become its first director dedicated to photography; and Vielmetter hired Rebecca McGrew, most recently the director of the Benton Museum of Art at Southern California’s Pomona College, as senior director of institutional relations. (Artnet News, )

     

    Institutions

    • In directorial news, Kunsthalle Basel curator Elena Filipovic will begin her new role as director of the Kunstmuseum Basel on June 1, 2024, taking over for Josef Helfenstein, who is retiring after eight years; and the Cleveland Museum of Art extended the contract of longtime director William Griswold through January 2027. ( Cleveland.com)
    • In curatorial news, the Whitney named Meg Onli, recently appointed co-curator of the 2024 Whitney Biennial, its curator at large; Melanie Kress, currently a curator at High Line Art, was named senior curator of the Public Art Fund effective June 26; and the Brooklyn Museum hired Baltimore Museum of Art assistant curator Darienne (Dare) Turner to be its first full-time curator of Indigenous art. (, , Artnet News)
    • In labor news, the Storm King Art Center voluntarily recognized the union formed by its staff, while workers at the Walters Art Museum in Baltimore voted to unionize. (Artnet News, )

     

    Tech and Legal News

    • The public prosecutor’s office in Hamburg is reportedly resuming proceedings in dealer Johann König’s defamation case against Carolin Würfel, one of the journalists behind a 2022 report that made #MeToo allegations against him. The office is also said to be investigating whether three women wrote false affidavits regarding accusations against König, who is seeking millions of euros in damages for pain and suffering. ()
    • Metakovan (aka Vignesh Sundaresan) and his company Portkey Technologies sued former associate Twobadour (aka AnandVenkateswaran), alleging that the latter has been falsely claiming credit for acquiring the record-setting Beeple NFT for $69.3 million in 2021. (Artnet News)

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“I got to a point in my career where it was like, I’m having these museum shows, I’m in this magazine, I’m represented by this gallery, or sold a piece of art for this much money. And none of it brought me peace or joy or made me feel better about myself. Success is as good as being in a fancy hotel room. The first 15, 20 minutes of it, you get excited, you can turn the shower on, you jump on a nice bed. Then after a while, you’re still just consciousness inside of yourself and susceptible to whatever experience you’re having.”

 

Jordan Wolfson, reflecting on making it big in the art world during an interview with fellow artist Heji Shin. ()

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Data Dip

The New Private Museum Map

Data and visualization courtesy of Larry’s List.

The number of private museums has ballooned in the last decade, and so has their influence within an art world where public funding often continues to be a major challenge.

In its eighth annual Private Art Museum Report, the collector-focused online resource Larry’s List (in conjunction with the University of Amsterdam‘s sociology department) surfaced numerous eye-opening details about the 446 such institutions now operating around the globe, including where they are located and how they reach their audiences…

  • 89 percent of all private museums worldwide are housed on just three continents: Europe (50 percent), Asia (24 percent), and North America (15 percent).
  • But the picture changes dramatically when viewed by country, as the global leader in private museums is now Germany (60), followed by the U.S. (59), South Korea (50), and Greater China and Italy (30 each).
  • By city, Seoul tops the rankings with 17 private museums, followed by Berlin (14), Beijing (11), New York (10), and Athens (nine).

Also worth noting: While Europe may be the historical leader in private museums, the greatest momentum has manifested further east lately. The report finds that, since 2010, Asia has opened 46 such institutions, “which is just about half of all currently operating private art museums” across a continent that now accounts for nearly one-quarter of the world’s supply.

The construction push partly seems to be a response to the low number of public institutions focused on contemporary art in the region—and if the trend keeps up, the continental rankings could look very different a few years down the line.

[Read More

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Thanks for joining us in the Back Room. See you next Friday.

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