Can you retire early if you run a business partnership?

| Nov 24, 2022 | Business Law

Perhaps the doctor recently diagnosed your spouse with cancer, or maybe the business has just been more financially successful than you originally anticipated. There are countless reasons why you may realize several years into a successful business partnership that you are ready to retire much earlier than originally anticipated.

While the thought of leaving the daily grind behind might excite you, you may worry that your business partner could block your retirement. Do you have the option of retiring early, or must you follow through with a long-term commitment, such as a 10-year timeline in your partnership agreement?

You can talk to your partner about a buyout

Many people expect there to be conflict about a major transition without actually broaching the topic with their business partner. Your partner may not know about your personal situation and could potentially understand why you are ready to move on from the business if given an opportunity.

If the two of you have a sit-down discussion about your goals and your desire to retire, they may be more amenable to the idea than you realize. They could potentially buy you out in accordance with the terms set in your partnership agreement and assume sole ownership. On the other hand, they could very well find themselves in a similar position to you, at which point you could negotiate either dissolving your partnership or selling the business to someone else.

You can always go to court if necessary

Sometimes, even competent and successful professionals become emotional about the prospect of change or fear having sole responsibility for something as major as a successful company. If your partner tries to block you from selling your interest in the company or leaving the workforce, you may need to consider going to court.

They could try to claim that you are in violation of your contract with them, which might complicate the situation. A judge could potentially help the two of you resolve that dispute. Before you go to court, however, it may be worth pursuing mediation first to see if the two of you can’t work things out before airing your grievances in civil court. In most cases, your partner won’t be able to force you to remain a the company.

Pursuing the future that you want sometimes involves knowing when it is time to move on from a specific business partnership.