BID Sothebys

In a novel bid to expand the way auction houses do business, Sotheby's said Monday it had agreed to pay up to $85 million for a blue-chip art advisory firm called Art Agency, Partners.

Art advisers typically serve as independent consigliere to collectors, hired to help buyers navigate the opaque, high-stakes world of auctions, galleries and fairs in order to amass coveted artworks. Such firms have proliferated in recent years, but the nearly two-year-old Art Agency has quickly risen near the top, led by former New Museum curator Allan Schwartzman and former Christie's rainmaker Amy Cappellazzo.

The firm's clients include Dallas Museum of Art trustee Howard Rachofsky and Brazilian mining magnate Bernardo Paz, whose 5,000-acre park Instituto Inhotim is dotted with oversize art installations selected in part by Mr. Schwartzman, its creative director.

By branching into the art advisory business, Sotheby's could position itself as an indispensable guide to heavyweight collectors seeking advice about ways to expand or retool their art holdings. The effort could also backfire if collectors ever feel pressured to shop at Sotheby's. The house said its clients will pay their advisers on a retainer basis so that fees aren't tightly linked to sales. (Retainers could also bring the house steady fees even if auction sales waver overall.)

The move is the latest salvo in Sotheby's cutthroat rivalry with Christie's International to become a one-stop shop for the world's art-loving billionaires, many of whom have already locked in art-backed loans, storage, appraisals and other perks from both houses. The volatile art market is also putting pressure on Sotheby's and Christie's to go into strategic overdrive and introduce or expand ventures beyond their traditional auctions.

Sotheby's said it bought Art Agency for $50 million with a pledge to pay an additional $35 million if undisclosed performance targets are met by the firm's 15 members over the next five years. Under the terms of the deal, the house will hire the firm's staff and absorb its art fund and entire client roster—a provocative arrangement in a realm where discretion is prized. The house said the firm's clientele have been notified.

The deal comes two months after Sotheby's offered voluntary buyouts and several weeks after new chief executive Tad Smith hired Marc Porter , another top deal maker at Christie's. A new management hierarchy is also emerging, much of it led by newcomers to Sotheby's: Under the house's newly created advisory arm, called the Fine Art Division, Mr. Porter will serve as co-chairman alongside Mr. Schwartzman and Ms. Cappellazzo. Mr. Porter will focus on expanding private sales globally while the other two work as advisers and oversee several specialist departments including impressionist, modern and contemporary art. Eventually, Sotheby's said, additional collecting categories spanning the 20th and 21st centuries will fall under the chairmen's purview including American art, Latin American art and modern British art.

Former investment banker and lawyer Adam Chinn, the firm's third partner, has also landed a plum role: Starting Monday, Mr. Chinn will become executive vice president of world-wide transaction support, succeeding Mitchell Zuckerman, a 37-year veteran of the house who is retiring.

Write to Kelly Crow at kelly.crow@wsj.com

(END) Dow Jones Newswires

January 11, 2016 07:35 ET (12:35 GMT)

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