PART 2 OF 3: The Key Terms to Negotiate

The provisions that determine the deal you are actually agreeing to.

An LOI is only as valuable as the terms it captures. The provisions negotiated at this stage frame everything that follows, and the items left vague tend to become the disputes of the drafting phase. This article addresses the terms that most warrant attention in a practice acquisition LOI.

Price and how it is paid

Price is the headline term, but how it is paid matters just as much. The LOI should address not only the purchase price but the payment structure — cash at closing, any seller financing, earn-outs or holdbacks, and any amounts contingent on future performance. A price figure without payment terms leaves the most consequential questions unresolved.

Deal structure

The LOI should state whether the transaction is an asset purchase or an equity purchase, because the structure drives liability, tax, and which licenses and contracts transfer. Establishing structure early prevents a fundamental misalignment from surfacing after diligence has begun. In a healthcare deal, the structure also interacts with regulatory and ownership rules that should be flagged at this stage.

What is included and excluded

The LOI should identify, at least in general terms, what is being acquired — and what is not:

• The assets included, such as equipment, goodwill, and records, and any excluded assets.

• Which liabilities, if any, the buyer will assume.

• The treatment of accounts receivable and work in progress.

• The premises — whether the lease is assigned or a new lease or purchase is contemplated.

Exclusivity and timing

Exclusivity is one of the most valuable terms a buyer can secure and one a seller should grant carefully. A buyer invests heavily in diligence and wants assurance the seller is not shopping the practice; a seller wants a reasonable, bounded period rather than an open-ended lockup. The LOI should also set an anticipated timeline and target dates for diligence, the definitive agreement, and closing.

Conditions and contingencies

The LOI should flag the major conditions on which the deal depends — satisfactory diligence, financing, required regulatory approvals and consents, and, in healthcare, matters such as credentialing, enrollment, and licensure. Naming these early sets realistic expectations and avoids surprise later.

Post-closing expectations

Where the parties anticipate a continuing relationship — a seller who will stay on during a transition, a non-compete, or seller financing — the LOI should note these in principle. Raising them at the LOI stage prevents a late-stage impasse over terms one side assumed and the other did not.

How West Coast Health Law Can Help

We help practice buyers and sellers negotiate LOIs that capture price, structure, exclusivity, and the other terms that shape the deal, so the definitive agreement builds on a clear foundation.

West Coast Health Law offers a FREE consultation which you may schedule by clicking the button on our website.

This article is provided for general informational purposes only and does not constitute legal advice or create an attorney-client relationship. Laws change and every transaction is different; consult a qualified attorney about your specific situation.