What I Tell Clients Who Come to Me After Receiving a Letter of Intent

It happens more often than you might think. A dentist, physician, or veterinarian calls my office and says something like, “I just received a letter of intent from a potential buyer” (or a hospital group, or a DSO). “It looks pretty straightforward. Can you just review it quickly before I sign?”

My answer is always the same: put the pen down. Let’s talk first.

A letter of intent in a healthcare transaction is rarely as simple as it looks. And the decisions you make at this stage, before you’ve even hired an attorney or a financial advisor, can shape the entire deal that follows.

Here’s what I walk my clients through when they come to me at this point in the process.

First: Understand What a Letter of Intent Actually Is

A letter of intent (LOI) is typically presented as a non-binding expression of interest. The buyer outlines the basic terms they’re proposing, and the seller acknowledges them before formal due diligence begins. On the surface, it can feel like a formality, a handshake on paper.

But here’s what I want my clients to understand: even though most of the LOI is non-binding, some provisions almost certainly are. Exclusivity clauses are nearly always binding. Confidentiality obligations usually are too. And the terms you agree to at the LOI stage set the anchor for every negotiation that comes after.

If you accept an LOI with a valuation you’re not fully comfortable with, you’ve made it much harder to push back later. If you accept vague language around your post-closing role, you may find yourself locked into an employment arrangement that doesn’t match what you expected.

The LOI matters. A lot.

Second: Don’t Assume the Terms Are Standard

Buyers, particularly DSOs and large medical groups, have legal teams that prepare these documents regularly. Their LOI reflects their preferences, their protections, and their deal structure. It is not a neutral document.

When I review an LOI for a healthcare seller, I’m looking at several things closely:

• Valuation and structure. Is this an asset sale or a stock sale? How is the purchase price calculated? Is there an earnout, and if so, what are the metrics tied to it? Earnouts in particular deserve careful scrutiny, because they promise future compensation that may or may not be realistic based on the conditions attached.
• Equity rollover. Some DSO and PE transactions now include a rollover equity component, where the seller retains a percentage ownership stake in the buyer’s platform. This could be a meaningful wealth-building opportunity, but it comes with risk: there is no guarantee you will ever see any return on that investment. You need to understand the structure before you agree to it in principle. And you need to be comfortable with the amount of money you receive at closing, viewing any other benefit you get from equity down the road as a bonus, not a given. 
• Post-close employment. Most healthcare buyers require the selling physician, dentist, or veterinarian to stay on under an employment or independent contractor agreement. The duration, compensation structure, and non-compete terms attached to that agreement are critical, and they are often tied back to representations made at the LOI stage.
• Exclusivity period. Once you sign an LOI with an exclusivity clause, you’re generally prohibited from talking to other buyers for a defined window, often 60 to 90 days. That’s time and leverage you’re giving up. Make sure the terms justify it.
• What’s not in the LOI. Sometimes what’s missing tells you as much as what’s there. Vague language around transition support, patient notification, or staff retention can create problems later.

Third: Get Your Team Together Before You Respond

One of the most common mistakes I see healthcare sellers make is treating the LOI as something they can handle alone, or with just one advisor. A healthcare M&A transaction has legal, financial, and tax dimensions that are all interconnected. The structure of the deal affects your tax liability. Your tax liability affects how you should negotiate the purchase price. How the deal is structured affects your liability exposure post-close.

Before you respond to an LOI, you should have, at minimum:

• A healthcare transactions attorney reviewing the legal terms
• A CPA or financial advisor with healthcare M&A experience analyzing the tax and financial implications
• A clear picture of your personal goals: Are you trying to maximize the upfront payout? Retain clinical autonomy? Plan for a full exit in five years? Stay involved long-term?

Your goals should drive your negotiation. The buyer’s LOI is a starting point, not a final answer.

Fourth: You Have More Leverage Here Than You Think

Sellers often come to me feeling like they’re in a reactive position. The buyer sent the LOI. The buyer set the terms. The buyer has a big legal team.

What I remind them is that the buyer chose their practice for a reason. The buyer wants this deal. That means you have leverage, particularly at the LOI stage, before either party has invested significant time and money in due diligence.

This is the moment to ask for what you actually want, whether that’s a higher purchase price, a cleaner earnout structure, a shorter non-compete period, or more flexibility in your post-close role. Those conversations become harder after you’ve signed.

It’s also the moment to walk away if the fundamental terms don’t work. That’s always easier before you’re 60 days into due diligence and emotionally committed to closing.

The Bottom Line

Receiving a letter of intent is an exciting moment. It means a buyer sees real value in what you’ve built. But it’s also a moment that calls for clear heads and good counsel, not a quick signature.

If you’ve received an LOI and you’re not sure what to do next, that’s exactly what my team is here for. We work with healthcare and dental professionals across Connecticut and Massachusetts on practice transitions, and we’d love to help you navigate the process.

Reach out to Franklin & Frankel at (860) 561-4832 or info@franklawllc.com to schedule a consultation.

Franklin & Frankel LLC is a boutique law firm based in West Hartford, CT, serving clients in estate planning, probate, business law, and real estate, with particular experience in healthcare and dental practice transitions.