Personal Finance

I'm in my late 40s and have already hit my retirement goal - I want to sell my business but I don't think my business partner will want to

Business Owner
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24/7 Wall St. Key Takeaways:

  • The Reddit post I’ll explore today shows that early retirement is far more than just a number in your bank account. Often, leaving the workforce is more complicated than many imagine!
  • The key is to balance financial security with emotional well-being, and that doesn’t always mean retiring completely.

I recently came across a Reddit post with an interesting dilemma. A man in his 30s shared that he had hit his financial independence goal but faced a key problem: he still owns half of a business he no longer wants to be a part of. The company currently pays him between $800K and $1.2M each year, and his half of the company is valued at $5 million. But he feels burnt out and wishes to step away.

That said, selling and leaving are complicated by several factors, including his business partner’s resistance.

This post shows how complicated becoming financially independent is, even after you’ve hit your goal number in the bank. It isn’t just about numbers.

Here’s a breakdown of his situation and my advice. Remember, this is just my opinion, not financial advice:

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Financial Independence: The Good News

Let’s take a minute to appreciate that this Redditor has reached a huge milestone. He has $4 million in investments on top of $1 million in other assets. His $10k/month spending needs are fully covered! He looks like he’s in a great position to retire. But…

The Problem: An Illiquid Business

Despite hitting his goals, most of his investment is tied up in company stock. He owns 50% of a business that has been highly lucrative but is now draining him emotionally. The business is still going well, but he wants to sell his shares. There are several problems in his way, though:

  1. Illiquid Business: His half of the business is worth approximately $5 million, but selling it would be difficult. His business partner likely wouldn’t agree to a sale, and there are limited buyers due to the nature of the business. Selling just isn’t easy.
  2. Family Considerations: His children are still in school, and he lives in a high-cost area. Quitting feels risky when his monthly expenses are so high.

Given his situation, here are a few different paths I recommend:

1. Gradual Transition

Instead of walking away entirely, a gradual reduction in hours or responsibilities could help manage burnout while keeping the business’s financial benefit. He could consider hiring more employees to delegate tasks to, potentially lowering his salary to pay for these new employees. This transition can provide some relief from burnout while still maintaining some income and avoiding the complicated path of selling his business shares.

2. Explore Internal Buyout

Though his business partner may not want to sell the company, there could be an opportunity to negotiate an internal buyout. If the business is successful, the partner might eventually be interested in purchasing his stake. This is often easier than bringing in an outside investor to fund the buyout.

This path could even be done gradually, as well. The business partner could purchase the poster’s shares in chunks, instead of all at the same time.

3. Consider Professional Mediation

If the Redditor is set on selling his shares, I would recommend professional mediation. Often, it’s much easier to sell if professional relationships aren’t soured before mediation is sought. Early is better than too late.

4. Stepping Away Temporarily

Before any major decisions are made, I would recommend a sabbatical. It sounds like the poster is experiencing some difficult burnout, and it is very hard to make good decisions when your brain is already fried. Taking a few months off can give the poster the space he needs to recover and take a fresh look at the situation.

This reminds me of a similar Reddit post I discussed where burnout played a huge role.

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