Letter of intent

Editorial approval scope: The team checked current source fidelity, scope boundaries, dates, arithmetic, reader usefulness, practical workflow, and general-information limitations.

Map binding status provision by provision

An LOI often states that the purchase proposal is nonbinding while confidentiality, exclusivity, access, publicity, expenses, governing law, and dispute terms are binding. A broad introductory disclaimer can conflict with mandatory language elsewhere.

Create a table listing every section, its binding status, start date, end date, survival, remedy, and owner. Avoid casual emails or operational conduct that imply a deal has closed.

Define the transaction structure

State whether the proposal concerns an asset purchase, stock purchase, merger, or another form. Identify buyer, seller, target entities, included sites, and material exclusions.

For an asset deal, outline transferred assets and assumed liabilities. For a stock deal, describe the equity acquired and any rollover. The final structure can affect tax, consents, payer records, licenses, employment, contracts, records, and successor risk.

The SBA M&A page recognizes asset and stock purchase agreements and recommends attorney review. It supplies general orientation rather than healthcare transaction authority.

Write a reproducible price bridge

Headline enterprise value tells only part of the economics. Summarize the proposed earnings definition, multiple or valuation method, debt, cash, working-capital target, transaction expenses, escrow, holdback, seller note, rollover, earnout, and other adjustments.

Attach a sample calculation. If “adjusted EBITDA” or “net working capital” lacks a schedule, parties may be agreeing to different numbers. State the measurement date, accounting policies, dispute process, and which term controls if summaries conflict.

Diligence needs scope and limits

List requested financial, tax, legal, payer, clinical, workforce, privacy, security, facility, vendor, insurance, and compliance information. Define access controls, permitted uses, redaction, clean-team arrangements, return or destruction, and contact rules.

Client records and PHI require an applicable legal pathway. A signed LOI does not authorize unrestricted access. Privacy and legal owners should approve the purpose, minimum data, recipient, system, and agreement before disclosure.

Set conditions for satisfactory diligence, financing, approvals, third-party consents, definitive documents, and no specified adverse change. Avoid promising that any payer, regulator, landlord, employee, clinician, or client will consent.

Define the diligence cutoff and update duty. Material events after the data-room snapshot, such as a payer termination, license action, cyber incident, recoupment, key departure, or facility loss, need a clear reporting route. Counsel should align that route with representations and closing conditions.

Record who may contact employees, families, payers, landlords, and vendors during diligence. Uncoordinated outreach can disrupt care or breach confidentiality even when the transaction never closes.

Keep approvals in writing.

Protect care during exclusivity

An exclusivity period can let the buyer invest in diligence while preventing the seller from soliciting or negotiating alternatives. Define covered parties, prohibited contacts, existing discussions, inbound inquiries, notice, duration, extension, and remedy.

The seller still operates the practice. Clinical decisions, incident response, staffing, payroll, payer corrections, refunds, privacy, and client communication continue under existing authority. Deal approval should never become a routine gate for needed care or required reporting.

Keep announcements controlled

Premature disclosure can affect staff retention, family trust, payer relationships, landlords, and vendors. Specify who may communicate, when, through which approved language, and how legally required disclosures are handled.

Avoid claiming that the buyer owns, manages, or supports the practice before closing and authorized transition. Marketing should preserve each entity’s current identity and responsibility.

A fictional eleven-term LOI

Bright Path’s LOI has 11 sections. Three are expressly binding: confidentiality, 45-day exclusivity, and expense allocation. Eight are proposed terms, including enterprise value, stock-purchase structure, working-capital target, diligence scope, earnout concept, rollover, closing conditions, and target date.

The binding-status register is 11 of 11 complete. The team finds that the earnout paragraph uses “collections” without defining refunds or recoupments. It marks the concept unresolved rather than treating the LOI headline as a final formula.

The parties also restrict diligence access to aggregated data until privacy counsel approves any deeper pathway. Clinical leaders continue ordinary care and safety decisions.

Plan the route to definitive agreements

Create a responsibility matrix for purchase agreement, disclosure schedules, employment and restrictive-covenant terms, transition services, leases, consents, financing, payer and regulatory filings, record custody, insurance, and closing deliverables.

Track unresolved LOI terms by owner and decision date. A short target close cannot compress external approval times or replace evidence.

The SBA growth guide and buying-an-existing-business guide support general planning and diligence. Transaction counsel should tailor the LOI.

Approve the LOI only after counsel maps binding status, decision authority, price concepts, exclusivity, confidentiality, access, expenses, and termination. Mark every open business term. Signing should release the next diligence and drafting phase, not create operational control, payer authority, or a promise that closing will occur.