Everyone talks about the weakness of the middle market in this art boom but Bonhams seems to have done well with it. At least, that’s what Scott Reyburn concludes from auction houses’s results released last week:
It has spent £30 million on a sleek new 60,000-square-foot headquarters on Bond Street, which opened in October. It’s also making money. Last year, it made £21.9 million net income, or 3.8 percent, from its 2013 sales.
Given that we’re supposedly in the middle of an art market boom, this might not seem a stellar performance. Yet Bonhams’s neighbor, Sotheby’s, which is under pressure from the billionaire investor Daniel S. Loeb to change its board and chief executive, could only make 2.1 percent net profit from a record annual sales total of $6.3 billion in 2013. (Sotheby’s reports its earnings in dollars.)
Calling the middle market a sweet spot for its margins might be a signal that it is time to sell the firm. Or so Sky News seems to think:
Sky News has learnt that the company’s shareholders are bringing in City advisers to assess whether Bonhams itself should be put up for sale on the back of record profits.
Sources said on Saturday that Greenhill, an investment bank, had recently been appointed to conduct a strategic review, which will involve examining a range of options for bringing new capital into the business.
The Auction ‘Sweet Spot’ (NYTimes.com)