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Dan Loeb’s 5 Point Plan for Improving Sotheby’s Business

April 15, 2014 by Marion Maneker

Daniel Loeb

Third Point released a 30-page deck last night making their case for three board seats on Sotheby’s board of directors. Here is Loeb’s list of growth opportunities:

Strategy

Define what Sotheby’s is today or what it wants to be

◊ Competitors are laser-focused on the consumer experience and their brand, while Sotheby’s appears indifferent

Articulate a long-term growth strategy and vision for the Company and its brand 

Formulate a strategy to manage the inherent cyclicality of its markets

◊ Contingency plan for the next downturn should have both defensive and offensive elements (e.g., prudent management of capital and expenses, opportunity to be a buyer or lender of last resort, development of cycle proof earnings streams)

Auctions & Private Sales

Invest in long-term talent development and recruitment

Cultivate numerous points of contact within the Company so that collectors and consignors become clients of Sotheby’s, not just individual specialists

Invest in front-end technology to facilitate online sales and auctions

Invest in data technology to record private sale and auction inquiries to promote cross-selling, improve customer service, and increase volume

Follow up with clients to drive cross-selling to capture a greater share of each client’s relevant spending

Develop a robust approach to smaller ticket items in order to grow the customer base and compete more effectively with Christie’s

Secured Lending

Deploy more capital against profitable secured lending business, especially now that the business has a separate debt facility to efficiently fund loans (consignor advances, general term loans)

Principal & Dealer

Build a private business: initiate a greater number of curated auctions and exhibitions to leverage Sotheby’s client base, real estate, and relationships

◊ Opportunity exists to take share from art dealers and gallery owners (some of which are rumored to be generating over $ 1 billion of sales annually) given Sotheby’s superior and continuous legacy, global footprint, and in-house expertise

No defined long-term plan for the Company’s S|2 galleries

◊ How are artists chosen?
◊ How does Sotheby’s leverage its entire platform to promote them?
◊ And why is it even called S|2 and not Sotheby’s?

Consider partnering with living artists and representing artists’ estates

Brand Extension

Explore additional brand extension opportunities

◊ E.g., wine storage, data analytics

Develop a more thoughtful retail strategy

◊ What is the long-term plan for Sotheby’s Diamonds and Sotheby’s Wine?

◊ How can the Company better utilize its locations when auctions aren’t happening?

Third Point Sotheby’s Presentation

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Filed Under: General

About Marion Maneker

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