Letter of Intent Template for Acquiring a Hypnotherapy Practice

Parties and Practice Identification

Identifies the buyer and seller by legal name and establishes the exact business entity being acquired, including the practice name, operating address, any DBAs, and whether the transaction is structured as an asset purchase or equity purchase. For hypnotherapy practices, asset purchases are strongly preferred to avoid assuming unknown liabilities related to prior client complaints, scope-of-practice violations, or unlicensed practice claims.

💡 Confirm early whether the seller operates as a sole proprietor, LLC, or S-Corp, as this affects tax treatment and asset allocation. If the seller has a registered trademark, professional website domain, or branded course platform, these must be explicitly listed as acquired assets. Avoid equity purchases unless you have conducted full legal review of all historical client complaints, insurance claims, and scope-of-practice compliance.

Purchase Price and Valuation Basis

States the proposed total enterprise value, explains the valuation methodology, and identifies the financial metric on which the multiple is based — typically Seller's Discretionary Earnings (SDE) for owner-operated practices. Hypnotherapy practices in the $250K–$1.5M revenue range typically transact at 1.5x–3x SDE depending on revenue diversification, associate staffing, and digital product contribution.

💡 Insist on separating in-person session revenue from digital and recurring revenue in the valuation conversation — digital revenue is more transferable and should be weighted more favorably. If the seller cannot produce three years of clean financials, consider anchoring a lower multiple with an earnout tied to post-close performance. Practices with 100% owner-operator revenue should be valued at the lower end of the 1.5x–2x range with aggressive earnout protection.

Transaction Structure and Financing

Outlines how the purchase price will be funded, including the proposed mix of SBA 7(a) financing, seller financing, equity rollover, and earnout. Hypnotherapy practices are SBA eligible, and most acquisitions in this sector use an SBA 7(a) loan covering 70–80% of the purchase price, with the remainder split between a seller note and buyer equity injection of 10–15%.

💡 SBA lenders will require the seller to remain engaged under a consulting or transition agreement post-close — make sure the LOI signals this expectation explicitly so the seller is not surprised during bank underwriting. Seller notes must be on full standby for the SBA loan term (typically 24 months), which sellers sometimes resist. Address this in the LOI rather than at closing to avoid late-stage deal friction.

Earnout Structure and Client Retention Milestones

Defines the earnout mechanism, which is especially critical in hypnotherapy acquisitions where client relationships are personal and transferability is uncertain. A well-structured earnout protects the buyer if clients disengage after ownership change while incentivizing the seller to actively support the transition. Earnouts in this sector typically represent 20–40% of the total purchase price and are measured over 12–24 months post-close.

💡 Define 'active client' precisely in the LOI — ambiguity here is the most common earnout dispute trigger. Sellers will push for shorter measurement windows (12 months) and broader definitions of retention; buyers should push for 18–24 months and session-completion-based definitions. Also address what happens if the seller breaches the non-compete or fails to make agreed client introductions — earnout should be partially forfeited in these scenarios.

Transition and Seller Involvement

Specifies the length and structure of the seller's post-close transition period, which is critical in hypnotherapy given how deeply client trust is tied to the original practitioner. A structured handoff — including co-sessions, warm referrals, and formal introductions to the buying practitioner — is often the difference between strong client retention and rapid attrition.

💡 Sellers often underestimate how long meaningful transition support takes — a 90-day handoff is rarely sufficient for practices where clients have been seeing the same practitioner for years. Build in a 6-month baseline with optional extension language. Compensation for the transition period should be structured to be consistent with SBA lender requirements (typically below market rate to avoid inflating post-close expenses) and should be separate from any earnout payments.

Due Diligence Period and Access

Establishes the due diligence timeline, what information the buyer will have access to, and the conditions under which the LOI becomes binding or the deal proceeds to a purchase agreement. Hypnotherapy-specific due diligence must include certification verification, state licensing compliance, client retention data, referral source documentation, and liability insurance review.

💡 45 days is the minimum realistic due diligence window for a hypnotherapy practice given the complexity of certification verification and client data review. Push for 60 days if the practice has multiple revenue streams or associate practitioners. Request a data room setup at LOI signing — sellers who resist organized disclosure are often concealing documentation gaps that will surface later. Include a clause allowing Buyer to extend due diligence by 15 days if material documentation is delivered late.

Exclusivity and No-Shop Period

Grants the buyer an exclusive negotiating window during which the seller cannot solicit or entertain competing offers. This protects the buyer's investment of time and due diligence resources and is standard in lower middle market acquisitions.

💡 60 days of exclusivity is appropriate for most hypnotherapy acquisitions. If you anticipate SBA lender timelines will extend beyond 60 days, negotiate a 30-day extension option tied to good-faith progress milestones (e.g., signed lender engagement, completed due diligence). Sellers represented by brokers may push back on exclusivity length — a 45-day initial window with a 30-day extension tied to lender commitment is a common compromise.

Non-Compete and Non-Solicitation

Restricts the seller from opening a competing hypnotherapy practice or soliciting former clients and referral partners within a defined geographic area and time period following the close. This is particularly important in hypnotherapy where the seller's personal brand is the practice's primary asset and could easily reconstitute a competing business.

💡 State enforcement of non-competes varies significantly — California, Minnesota, and North Dakota have near-total non-compete bans, which meaningfully changes post-close risk for buyers in those markets. Tailor the geographic radius to the practice's actual client draw area; urban practices may warrant a smaller radius (10–15 miles) while rural practices with regional referral networks may require broader protection. The carve-out for online content is a common seller request and is usually reasonable, provided the seller is not rebuilding a competing direct-to-consumer practice under a different brand.

Confidentiality

Requires both parties to maintain the confidentiality of the transaction, the LOI terms, and all information shared during due diligence. This is especially sensitive in hypnotherapy, where premature disclosure to clients or referral partners could trigger client attrition before closing.

💡 Build a client communication plan into the LOI as an exhibit or post-close obligation — leaving this undefined creates risk. The seller will want some control over the announcement narrative, which is reasonable, but the buyer needs approval rights over any communication that could shape client expectations about the new ownership. Associate practitioners who must be informed of the transaction for lender or operational reasons should be identified by name and subject to their own NDA requirements.

Binding and Non-Binding Provisions

Clarifies which sections of the LOI are legally binding and which represent non-binding expressions of intent. Standard practice is to make confidentiality, exclusivity, and governing law binding while leaving price, structure, and deal terms non-binding pending formal purchase agreement execution.

💡 Do not let sellers treat the LOI as a loose 'handshake' — binding confidentiality and exclusivity provisions protect both parties and signal deal seriousness. Some buyers attempt to make price or structure terms binding at the LOI stage; resist this unless due diligence is already substantially complete, as material discoveries (unlicensed practice periods, undisclosed complaints) may require price renegotiation.