Shadow and light: How private sales shape the art market

This discreet market, which evades official statistics, is nevertheless the true engine of the art trade. It allows galleries to weather crises, collectors to acquire pieces without attracting envy, and artists to place their works with carefully selected buyers. But this opacity comes at a cost: it fosters abuses, distorts value benchmarks, and often denies the public access to masterpieces that vanish into vaults or freeports.

01The origins of a parallel market: from the Rothschilds to the oligarchs

The history of private sales is intertwined with that of collecting. As early as the 18th century, European aristocratic families—the Rothschilds, the Medicis, the Esterházys—preferred discreet acquisitions to avoid prying eyes. These transactions, often concluded in the salons of private mansions, allowed works to change hands without attracting the attention of creditors or disgruntled heirs.

The professionalization of the market in the 20th century transformed these practices into a sophisticated system. Galleries like Wildenstein & Co. and Knoedler, active since the 1920s, perfected the art of private sales by building networks of loyal clients. Their model rested on three pillars: absolute discretion, privileged access to rare works, and long-term relationship-building. This approach reached its peak during the Cold War, when American intelligence services used art as a tool of soft power—quietly funding exhibitions of abstract art to counter Soviet influence.

Today, this system has adapted to the era of globalization. Galleries like Gagosian or Hauser & Wirth manage waiting lists for their star artists, while platforms like specialist online platforms offer "private sales" online. But the principle remains the same: controlling who buys what, at what price, and under what conditions.

02Behind the scenes of a transaction: how a work is sold privately

Imagine a Gerhard Richter painting fresh from the studio. Before it is even exhibited, the gallerist sends photographs to a select handful of collectors. Initial contact is made by phone or encrypted message—never email. If interest is confirmed, the work is presented in a neutral space: a hotel suite at Art Basel, a discreet office in Mayfair, or even a secured warehouse near Geneva Airport.

Negotiations begin with a price range, often 20 to 30% lower than what the work might fetch at public auction. But unlike auctions, where price is set by competition, here everything hinges on relationships. A loyal collector may receive a preferential rate, while a newcomer must prove their financial standing. Payment terms are equally flexible: standard bank transfers, cryptocurrency, or even exchanges for other works.

Once a verbal agreement is reached—often sealed with a handshake—logistical details are settled in the shadows. The work may be delivered directly to the buyer’s home, stored in a freeport, or even kept in the gallery’s reserves indefinitely. No public record will be left, save for a discreet entry in the gallery’s internal ledgers.

03The role of galleries: between brokerage and price control

Galleries play a central role in this system, acting as both intermediaries and market gatekeepers. Their power lies in their ability to create artificial scarcity and control access to works. Take Thaddaeus Ropac, for example: when representing a new artist, the gallery often begins by placing works with strategic collectors, generating demand before the public even discovers the artist.

This control extends to pricing. In 2017, David Zwirner sold a Basquiat privately for $110 million—a record sum that later served as a benchmark for public sales. This strategy, known as "price anchoring," involves establishing market value ahead of auctions, ensuring works reach new heights when they go under the hammer.

But this power has a downside. Galleries must constantly balance short-term interests (quick sales) with long-term value preservation. A poorly negotiated private sale can devalue an artist’s entire body of work. That’s why major dealers like Larry Gagosian or Iwan Wirth spend years cultivating relationships with collectors, hosting private dinners and studio visits to create a sense of exclusivity.

04Collectors: a clientele with varied motivations

Behind every private sale lies a buyer with complex motivations. For some, like billionaire Steve Cohen, art is just another investment—a diversifiable asset class. For others, like François Pinault, it’s a passion that evolves into a public collection. But most private collectors operate in the shadows, driven by reasons that go far beyond aesthetics.

Russian oligarchs and Gulf princes often use art as a tool for wealth diversification. A Picasso or a Rothko, easily transportable and difficult to trace, can serve as a store of value in times of political or economic crisis. The freeports of Geneva, Luxembourg, and Singapore are filled with privately acquired works that have never been exhibited.

Other collectors simply seek to avoid publicity. In 2015, an anonymous buyer acquired the Salvator Mundi, attributed to Leonardo da Vinci, for $127.5 million in a private sale. The painting was later resold at auction for $450 million—a record that would never have been achieved without that initial discreet transaction.

Finally, some use private sales to bypass legal restrictions. In 2022, several works from the Nahmad collection were seized by U.S. customs on suspicion of money laundering. Yet these same works had circulated freely for years through private transactions.

05The risks of opacity: forgeries and money laundering

The lack of transparency in private sales makes them fertile ground for abuse. The Knoedler scandal, exposed in 2011, is the most striking example. For over fifteen years, the New York gallery sold $80 million worth of fake Rothkos, Pollocks, and Motherwells, all acquired privately from a mysterious seller. Certificates of authenticity, provided by the gallery itself, were enough to deceive even seasoned collectors.

Forgeries are not the only danger. Private sales are regularly used to launder money. In 2016, a U.S. Senate investigation revealed that artworks had been used to finance Iran’s nuclear program. More recently, the Panama Papers exposed hundreds of private transactions involving shell companies and tax havens.

Regulators are beginning to act. Since 2020, the European Union has required art dealers to verify their clients’ identities for transactions over €10,000. In the U.S., the Treasury Department now mandates that galleries report cash payments exceeding that threshold. But these measures remain difficult to enforce in a market where discretion is the rule.

06The impact on artists: between opportunity and dependence

For artists, private sales represent both an opportunity and a trap. On one hand, they allow works to be placed with committed collectors without the pressure of auctions. On the other, they create dependence on galleries, which control market access.

Take Julie Mehretu, for example. When Marian Goodman began representing the artist in the 2000s, the gallery strategically placed her works with institutional collectors like MoMA and Tate. These private acquisitions later served as benchmarks for public sales, propelling Mehretu to the ranks of her generation’s most sought-after artists.

But this strategy has a downside. Artists whose works are too often sold privately risk seeing their market shrink. Without public auctions to establish reference prices, their value becomes difficult to assess. This is the case for many contemporary African artists, whose works circulate primarily through private sales organized by galleries like 1-54 or the Zinsou Foundation.

07The future of private sales: toward greater transparency?

The balance between discretion and transparency lies at the heart of current debates. On one side, collectors and galleries resist any regulation that might limit their freedom. On the other, regulatory pressure and public expectations are pushing for greater openness.

Digital platforms like specialist online platforms and 1stDibs are attempting to reconcile these demands by offering "semi-transparent" private sales. Buyers can browse available works, but prices and identities remain confidential. This approach, still marginal, could become more widespread with the adoption of blockchain technology, which would allow transactions to be traced without revealing identities.

Yet the core of the private market will likely remain unchanged. As long as collectors seek to avoid publicity, galleries want to control prices, and artists need to place their works discreetly, private sales will continue to thrive in the shadows. As dealer Ambroise Vollard once said: "A work of art is not sold—it is placed." And that placement, more than ever, happens far from prying eyes.