PART 3 OF 3: Strategy and Common Pitfalls

How to use the LOI to your advantage and avoid its traps.

Beyond the specific terms, how a party approaches the LOI shapes the negotiation that follows. The letter of intent is a strategic instrument, and the parties who use it well tend to fare better through the rest of the deal. This article addresses LOI strategy and the pitfalls to avoid.

Balance specificity against flexibility

An LOI that is too vague leaves the hardest issues for later, when leverage has shifted and positions have hardened. An LOI that is too detailed can slow the deal and bind parties before diligence justifies commitment. The art lies in resolving the terms that matter most while preserving room to adjust as diligence reveals the facts.

Protect leverage while you have it

Leverage will be greatest before exclusivity is granted and before significant costs are sunk. Buyers should secure the protections they need — and sellers should extract the commitments they want — while both sides still have alternatives. Terms deferred to the definitive agreement are negotiated from a weaker position once the parties are committed and the clock is running.

Common pitfalls

• Treating the LOI as a formality. Signing a preliminary document without close attention is how parties end up bound to terms they did not intend.

• Blurring binding and non-binding provisions. Failing to state clearly what is enforceable invites disputes and unintended obligations.

• Granting open-ended exclusivity. A seller who agrees to a long or indefinite no-shop period surrenders leverage and options.

• Leaving key terms for later. Deferring price mechanics, structure, or major contingencies often turns them into drafting-stage battles.

• Ignoring healthcare-specific issues. Overlooking regulatory approvals, licensing, enrollment, and ownership rules at the LOI stage sets unrealistic timelines and expectations.

• Skipping counsel at the LOI stage. Because the LOI shapes the entire deal and can bind, involving legal counsel before signing is far cheaper than repairing problems afterward.

Coordinate the LOI with the larger strategy

The LOI should reflect the party's overall goals for the transaction — its priorities on price, risk, timing, and any continuing relationship. An LOI negotiated in isolation from that strategy can lock in terms that undercut the party's real objectives. Aligning the LOI with the end goal keeps the deal pointed in the right direction from the outset.

Know when to walk

An LOI is also a checkpoint. If the parties cannot align on the fundamentals at this stage, that is valuable information, obtained before the substantial costs of diligence and drafting. A deal that cannot come together in the LOI rarely improves later.

How West Coast Health Law Can Help

We help healthcare practice buyers and sellers approach the letter of intent strategically — protecting leverage, drawing clear binding lines, and aligning the LOI with the goals for the deal. If you are entering into a practice acquisition, we can help you negotiate an LOI that sets the transaction on the right course.

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.