Letter of Intent Template for Acquiring a Chiropractic Practice

Parties and Practice Identification

Identifies the buyer entity, the seller (typically the individual DC and/or their professional corporation), and the specific chiropractic practice being acquired including its legal name, DBA, physical address, and tax ID. In multi-provider or multi-location scenarios, every entity and location must be explicitly named.

💡 If the practice operates under a professional corporation or LLC with entity-specific insurance contracts, confirm early whether the deal will be structured as an asset or stock purchase. Stock purchases preserve payer contracts but transfer all liabilities; asset purchases are cleaner but may require re-credentialing. Note this distinction clearly in the parties section so due diligence scope is aligned from day one.

Purchase Price and Valuation Basis

States the proposed total purchase price, the basis for that price (typically a multiple of trailing twelve-month or trailing three-year adjusted EBITDA or collections), and any adjustments that may be made following due diligence. Chiropractic practices in the lower middle market typically trade at 2.5x–4.5x adjusted EBITDA, with higher multiples for practices with associate DCs, diversified payer mix, and strong new patient trends.

💡 Sellers frequently inflate EBITDA by adding back owner compensation above market-rate associate DC salary (typically $80,000–$130,000 annually depending on market). Buyers should specify in the LOI that add-backs will be calculated using a replacement cost assumption for clinical labor. If collections are volatile due to personal injury lien volume, consider basing the multiple on a two or three-year average rather than trailing twelve months.

Deal Structure and Financing

Describes how the purchase price will be funded, including the allocation between SBA 7(a) financing, buyer equity, seller note, and any earnout component. This section should also specify the intended transaction structure (asset vs. stock purchase) and the proposed allocation among tangible assets, covenant not to compete, and goodwill for tax purposes.

💡 SBA 7(a) loans are widely available for chiropractic acquisitions and can finance up to $5M. The SBA will require the seller note to be on full standby for 24 months post-close, meaning no principal or interest payments to the seller during that period — sellers should understand this upfront to avoid friction at closing. Buyers using SBA financing should note that lender approval timelines (typically 60–90 days) will drive the closing schedule and should be built into the exclusivity and contingency periods.

Seller Note Terms

Outlines the principal amount, interest rate, repayment term, and subordination requirements of any seller-carried financing. The seller note serves both as a financing tool and as a signal of seller confidence in the practice's ongoing performance.

💡 Sellers often resist offset provisions that allow the buyer to withhold Seller Note payments in response to warranty claims. Negotiate a threshold (e.g., claims must exceed $25,000) and a defined process before offset rights can be exercised. The seller note is also a key lever in bridging valuation gaps — if the seller wants a higher headline price, the buyer can accept it while increasing the seller note percentage and tying repayment to performance, effectively creating a blended earnout-note structure.

Earnout Provision

Defines any contingent portion of the purchase price tied to post-close performance metrics, most commonly patient visit volume retention or gross collections over a defined post-close period. Earnouts are common in chiropractic acquisitions where patient attrition risk is high and the seller's cooperation during transition is critical to business continuity.

💡 Sellers should push for earnout metrics they can influence during the transition period — visit volume is more controllable than net collections, which can be affected by billing changes or payer mix shifts the seller has no control over. Buyers should resist earnout structures that create perverse incentives for the selling DC to retain patient relationships personally rather than transfer them institutionally. Include a provision that earnout metrics will be measured on a consistent accounting basis with the pre-acquisition period, and specify how new patient volume will be counted.

Transition Employment Agreement

Establishes the expectation that the selling chiropractor will remain employed by the practice post-close for a defined period to facilitate patient introductions, staff management continuity, and clinical oversight. This is one of the most important terms in any chiropractic LOI and is directly tied to patient retention and practice value preservation.

💡 The length and structure of the transition period is often the most heavily negotiated element in a chiropractic LOI. Sellers who are retiring or relocating may accept shorter periods; sellers who are burned out from administration but still want to practice clinically may prefer longer engagements with reduced administrative duties. Buyers should tie transition cooperation obligations to earnout vesting — if the seller does not fulfill transition duties, earnout eligibility should be reduced proportionally. Avoid vague language like 'reasonable cooperation'; define specific weekly hour minimums and patient introduction milestones.

Non-Compete and Non-Solicitation

Defines the geographic radius, duration, and scope of the seller's covenant not to compete or solicit patients or staff following the closing. This clause is particularly sensitive in chiropractic transactions because patient loyalty to the individual provider is the primary attrition risk.

💡 Non-compete enforceability varies significantly by state — California effectively prohibits them; many other states allow them if reasonable in scope, geography, and duration. Buyers should obtain a healthcare attorney's opinion on enforceability before finalizing terms. Sellers should negotiate carve-outs for any markets where they already practice or intend to relocate. For sellers who will remain employed under a TEA, the non-compete clock typically starts at the end of the employment period, not at closing — confirm this in the LOI to avoid ambiguity.

Due Diligence Period and Exclusivity

Specifies the length of the due diligence period, the scope of information the seller must provide, and the exclusivity commitment from the seller to refrain from marketing the practice or entertaining other offers during the defined period.

💡 Sixty days is typically sufficient for a straightforward single-location chiropractic practice; multi-provider or multi-location practices may require 75–90 days. Sellers should insist on a mutual termination right if the buyer fails to provide a written diligence update or term sheet reconfirmation by day 30, preventing the seller from being held in limbo by an uncommitted buyer. Buyers should specify that the exclusivity period does not automatically reset if the closing date is extended — each extension should require mutual written agreement.

Conditions to Closing

Lists the material conditions that must be satisfied before either party is obligated to close the transaction, including financing approval, satisfactory due diligence, lease assignment, staff retention, and regulatory approvals.

💡 Buyers should include a 'no material adverse change' clause that explicitly covers patient visit volume drops exceeding 15% and loss of any payer contract representing more than 10% of collections. Sellers should push back on conditions that give the buyer unlimited discretion to exit — require that any due diligence termination be supported by a written itemization of material findings. SBA financing contingency is standard and non-negotiable, but sellers should set an outside financing date (typically 75 days from LOI signing) after which either party may terminate if lender approval has not been obtained.

Confidentiality and Exclusivity Obligations

Reinforces the confidentiality obligations of both parties and specifies that the LOI's exclusivity and confidentiality provisions are the binding portions of the otherwise non-binding document.

💡 Sellers should explicitly prohibit buyers from contacting Practice employees, patients, insurance payers, or referral sources without prior written seller consent during the due diligence period. This is especially important in chiropractic transactions where premature disclosure can trigger staff departures or patient attrition before closing. Include a specific remedies provision — breach of confidentiality obligations should entitle the non-breaching party to seek injunctive relief without posting bond, given that monetary damages may be difficult to quantify.