When it comes to processes that demand the careful blending of art and science to drive a successful outcome, business transition is at the top of the list.
A business owner should be prepared to transition out of their business at any time, whether it's in two years or two decades, and the only way for the owner to ensure that level of flexibility is through an appreciation of the roles of art and science.
Let's begin with a definition. "Business transition" is the process through which a business owner transitions out of the business in some manner. It will happen, one way or another, and every business owner should be preparing for it. That means Gen Xers, millennials and others, as well as baby boomers. And even if the owner hasn't even thought about transition, they should be actively creating an operational foundation that supports all potential outcomes.
"Exit planning" is different. It assumes that the owner has identified a general timeframe for leaving the business and has at least thought about other variables like potential buyers, deal structures and a desired sale price.
In many instances, this premature identification of variables reduces the owner's flexibility and, as a result, decreases the odds of success.
The successful business transition
One more definition: A successful business transition is made up of two parts, and they are not optional:
- The process begins with a transition plan that considers stakeholder dynamics, data analyses, an indication of business value, financial and operational analyses of the business, and the variables that will make the business attractive to the most buyers. But above all else, it considers the business, financial and personal objectives of the owner.
- The second part is the implementation of the transition plan, which is fundamentally about business improvement and includes improving financial performance, making the business more attractive to potential buyers, and increasing business value through dedicated attention to the intangibles locked in the intellectual capital of the business. And just as the transitional objectives of the owner are the most important component of a transition plan, increasing business value is the most important part of implementing that plan.
As stated, these two parts are not optional. Both must be present if the owner is to understand the entire transition process, from beginning to end, as well as the significant benefits of a comprehensive approach.
The melding of art and science
Professional advisors from different disciplines provide services in the exit planning and business transition markets — wealth managers, financial planners, accountants, attorneys, bankers and brokers among them. The simple truth of the matter is that none of them can provide everything the business owner requires to successfully transition or exit. Each may provide an important piece of the process, but none of them can provide all of it.
The reason is obvious. Parts of the process are technical, or scientific, in nature — variables related to tax, law, deal structure and the numbers. Other parts require more abstract interactions between the business owner and the advisor. They are less precise and often subject to change. Some parts require a specialist who's a technician; other parts require a specialist who's a therapist. Seldom do these skill sets reside in the same person, so the business owner is left to deal with a combination of advisors.
Vincent van Gogh and Carl Sagan
The synergies between artists and scientists in business transition should not be underestimated by the business owner. The following analogy compares how Vincent van Gogh, the 19th century painter, and Carl Sagan, the 20th century astronomer, both heightened our appreciation of the stars, and in the process, helped us understand the significant value that can be achieved through the melding of art and science.
In "The Starry Night," van Gogh taught us about the power, beauty and sweeping majesty of the heavens. He created 21 versions of the painting, each of which captured the philosophy and emotion he experienced while looking out at the pre-dawn sky from his room in the asylum at San-Remy-de-Provence. "The Starry Night" may evoke a different response in each of us, but its ability to evoke a response is undeniable.
An astronomer, cosmologist and astrophysicist, Carl Sagan also taught us about the heavens, but he did it with a precision grounded in mathematics, technology and science. He was no less awestruck by the night sky than van Gogh, but he arrived at his awe from a completely different perspective.
What makes the analogy even more striking is the fact that Vincent van Gogh had an obvious appreciation for science, as evidenced by his use of subtle gradients of color and light to express panoramic, if not universal, changes in motion and energy. And Carl Sagan clearly understood the art required to make his work approachable for people who had little or no background in science. That's why van Gogh painted 21 versions of "The Starry Night," rather than just one, and Sagan repeatedly spoke of "a hundred billion other galaxies, each of which contains something like a hundred billion stars, in this vast and awesome universe."
To say that business transition is similar to this comparison of van Gogh and Sagan falls short of the mark because it is, in fact, much more powerful than that. Through each, our understanding of the stars is intensified, but when taken together, it's amplified many times over. The total is greater than the sum of the parts, and that is exactly how the blending of art and science affects business transition.
Science has limited application if you can't explain it to elementary school children, which Carl Sagan did many times. Similarly, the power of art can be compromised when it's disconnected from things that science has shown us to be true. Just as our understanding of the stars is dramatically heightened when science and art converge, the business owner's understanding of a successful transition is heightened when they are blended on his behalf.
As Carl Sagan noted, "We make our world significant by the courage of our questions and by the depth of our answers."
