I often meet with clients who have successfully managed their business for many years, but have no real plan when it comes to cashing in their life's work. As a business owner, you're focused on day-to-day profitability - and rightly so - but it's equally important to have an exit strategy plan that will allow you to realize the value of your investment.

A good first step is to familiarize yourself with the process, and learn where you'll need to involve trusted advisors along the way. Generally, there are 6 stages that business owners will need to work through when selling their business:

1. Preliminary negotiations.
This is the initial point of kicking off the conversation with an interested buyer. A business broker may take part in, or lead, these conversations, and you would be well served to bring your CPA and attorney into the conversation at this point as well. These initial negotiations set expectations, which can greatly influence the final deal - and any mistakes made now could derail the transaction later.

2. Letter of Intent (LOI).
The LOI lays out the general terms of the transaction. This usually includes whether or not the transaction is an asset or stock purchase, outlines any possible earn out clauses, addresses any non-compete agreements, and outlines the purchase price itself - all at a high level, and all subject to a due-diligence period. You should always review the LOI with your CPA and attorney prior to signing - it's very difficult to change the general terms of the LOI later without being accused of changing the deal.

3. Due diligence period.
This defined period of time is allocated to determine if the LOI terms are reasonable, based on an in-depth review of the financial condition of the company, client list, employees and employee agreements, legal and tax standing of the entity, and a number of other items. If you lack the internal resources to do a proper due diligence review, your CPA or attorney can be a great resource to assist you.

4. Definitive agreement.
This is the legally binding agreement that will replace the LOI. This agreement will incorporate every aspect of the deal. It is critical to have a qualified transaction attorney involved in the drafting of this agreement. It is also critical to have your CPA review this agreement for tax related items. Your CPA can also serve as a sounding board, reviewing the agreement as an objective third party. Certain items, like a Net Working Capital, need to be worked out at this time to leave no ambiguities.

5. Closing.
This is the official closing transaction and signing of the deal. The closing is similar to a real estate closing, but can be much more complex in terms of executing share transfers, non-competition agreements, employment contracts, and other deal related items.

6. Post closing adjustments & true-ups.
After the dust settles on the paperwork, there are usually post closing items and true-ups, built into the deal, that still need to be completed. Most deals have a Net Working Capital Requirement - this dollar amount is best described as the net of all current assets and all current liabilities that will be included in the transaction. The company historically maintains a level of Net Working Capital that supports the operations, pays next week's payroll, etc. The buyer wouldn't want to purchase a company that cannot make payroll in week one! The Net Working Capital Requirement is built into the deal to leave a healthy company behind. This number is estimated at the closing date, and later trued-up to an actual dollar value. Accounting work needs to be done to sort this out, and possibly make additional cash payments one way or another, depending on the final true-up.

Selling your business can seem daunting, but with trusted advisors like your CPA and attorney on your side, you can successfully navigate these 6 stages and realize the value of your greatest investment.