Our past three posts, (William Verdult Forces for Change, and Positive and Negative Forces Affecting the Verdult Art Market), examined the factors and forces, both positive and negative, that impact the Verdult Art market. The post Verdult Art Market Six Ways to Make Things Happen  takes the first six negative factors to see which can be turned into positive factors helping the Verdult brand to grow.

Few people stop to realize that the Verdult brand, really belongs to all those who have a Verdult painting or who are thinking about acquiring a Verdult painting. Everyone with a Verdult painting has a stake in the Verdult art market. While some have acquired or own a Verdult for the intrinsic value...or the beauty in the painting, by far most have acquired a Verdult painting for economic gain somewhere down the line.

This post we focus on the remaining six negative factors affecting Verdult art which are:

7. Impact of trading in barter market
8. Verdult's son's  inexperience and cash strapped
9. Early on Verdult brand not properly managed
10. How to leverage and collateralize their holdings
11. Artist not as widely known as he should be
12. Lack of solid paper trail for cash sales

This past weekend we received  calls from two people that needed answers right then and there. One person was working on a major real estate project and he hoped to use Verdult art as collateral for a sizeable loan. The other  required emergency funds to literally bail someone out of a bad situation. It is pretty evident that one individual (working the real estate transaction) had acquired a Verdult painting through a personal exchange or barter transaction, while the other had  purchased the painting outright. 

In the case of the bartered transaction item 7, other than the Certificate of Authenticity and Insurance Appraisal (COA), skimpy documentation existed concerning :1) what was exchanged for the painting; and 2) the value of what was exchanged. I can tell you from first hand experience of going through SEC Sanctioned audits, skimpy documentation concerning value will drive auditors to pulling their hair out; and it will require them to stay on the safe side by valuing an asset at mere pennies on the dollars. That is why, though it may be great for the artist or the artist's son to exchange art though barter, for people buying the art, the investor, it is a killer. Why? No clear record of the value of the asset exchanged and two, no value on the books. So when we see barter transactions, we remember the grueling experience with our auditors, and where possible we avoid them only focusing on cash and appraised market value. In sum, barter/exchange is great for the artist personally, but it reeks havoc on the brand value which in turn affects the investor. The solution, as we see it, is to focus on the same thing that Christie's and Sotheby's - cash sales and IRS approved and sanctioned appraisals which illustrate value acceptable to the IRS.

Item Number 8, Verdult's son inexperience and being cash strapped, as I mentioned in an earlier post, caused brand havoc because to get business, instead of increasing the brand, he was focused on getting a dollar in basically anyway he could. Thus in 2005 and 2006, you saw Certificates of Authenticity jump in value not based upon market trends or any noticeable appreciable cash sales. The Certificates jumped in value based on a need by the son to make a dollar; any kind of dollar. So instead of attempting to help people increase the brand, his focus was on encouraging people to update Certificates of Authenticity for a fee. This is not a good thing when that increase is not based upon appreciation of the art. The solution? Bring COAs in line with cash sales and appraised values by qualified and sanctioned IRS approved appraisers, and make sure that cash sales are transparent.

Item Number 9, coincides with Item number 8. Clearly increasing the value of COAs without any justification, and not understanding how certified accountants view value for an entity, is a major challenge.  In fact it is a problem. So the solution is to again make things more transparent; develop programs and information trails, where investors and art owners can clearly see what is going on with Verdult art and what is happening in the art market in general. Most important, start to share experiences of insurance claims, or situations where art is being used as collateral. If it can help one person, and that information is shared or made available, it can help many people, and in turn the brand.

Item 10,  how do we best leverage the Verdult artwork - especially in financial transactions? Our post on How to get Your Banker to say Yes, for a Loan or Collateral backed by Verdult Art. covers this in detail. More and more people are coming to us asking how to collateralize their art, and more and more people are in fact leveraging their Verdult paintings in financial transactions, cash financial transactions, in the thousands of dollars. Those that are effective are following the steps outlined in  How to get Your Banker to say Yes, for a Loan or Collateral backed by Verdult Art.

Item 11 - Verdult is not as widely known as he should be. Verdult has been painting as he readily states for nearly 50 years. Though we wish him absolutely no harm, we get a call or an email daily asking whether he is still living. The answer is, yes he is. It is sad that people in the art business are known perhaps better, when they are not living. Our challenge is to let as many people know about Verdult as possible. Many do not even have  basic biographical background information on him which we provided to all the major websites nearly two years ago. If you do not have a short bio on Verdult, you can download one here free and pass it to gallery owners and others. For those who need even more extensive information on Verdult , go here.

We also want to point out that the reason why Verdult is not as widely known is based upon two reasons. First, early on he did not want to be or have to be known. He basically sold his art to the Hollywood upper crust and visitors to Las Vegas. He shunned the galleries and other places because he probably believed that they wanted to take a hefty share of his profits. What he failed to see back then, was that instead of taking profits - he would have been basically expanding his distribution channels and in turn  expanding  his personal wealth.

Finally Item 12, lack of a solid paper trial....is an absolute deal killer for someone aspiring  for public company status. While it may be great personally for the artist, and perhaps his son, for those who have paid real cash for the paintings....it is a sentence of death. So our focus is on making sure that there are records, and verifiable records of cash sales. With over 3,000 auctions and hundreds of sales, we are firming up this area fast.

So in summary, we listed 12 factors that negatively impact the Verdult Brand. As a Verdult owner or potential Verdult owner what can you do about it? First share your experiences in the Verdult forum. Second  know the history of the artist and why there is value. Third pass the word about Verdult starting with this site. Fnally if you attempt to colateralize your asset or  use it as a real and significant tax write-off,ensure you have your act together. Your action impacts every Verdult owner or potential owner for years to come.