Letter of Intent Template for Acquiring a Medical Assisting School

Parties and Transaction Overview

Identifies the buyer entity, seller entity, and the specific assets or ownership interests being acquired. For medical assisting schools, it is critical to clarify whether this is an asset purchase or stock/membership interest purchase, as this determination has direct implications for how accreditor change-of-ownership rules apply and whether a new program participation agreement with the Department of Education is required.

💡 Sellers often prefer a stock sale to avoid triggering a full change-of-ownership review with CAAHEP or ABHES, since asset purchases almost always require a new approval. Buyers typically prefer asset purchases to limit liability exposure from prior regulatory findings, cohort default rate history, or undisclosed Department of Education correspondence. This tension should be addressed in the LOI and aligned with accreditor guidance before signing. Confirm with the relevant accreditor whether the proposed structure constitutes a reportable change of ownership before finalizing this section.

Purchase Price and Valuation Basis

States the proposed total purchase price, the valuation methodology applied, and how the price is allocated across tangible assets, intangible assets, and goodwill. Medical assisting school valuations typically range from 2.5x to 4.5x EBITDA depending on accreditation status, enrollment trend, Title IV eligibility, and placement rate documentation.

💡 Sellers with clean accreditation histories, placement rates above 85%, and diversified program offerings (phlebotomy, EKG, medical billing) should push toward the higher end of the 3.5x–4.5x range. Buyers should apply downward pressure if the school has experienced declining cohort sizes over the past two to three years, if the owner serves as the director of education, or if Title IV participation has triggered any Department of Education audit findings. Document all EBITDA add-backs clearly in an exhibit to avoid price renegotiation after due diligence.

Deal Structure and Financing

Outlines how the purchase price will be funded, including the SBA loan amount, buyer equity injection, and any seller note or earnout component. For medical assisting school acquisitions using SBA 7(a) financing, the structure must account for the accreditor's change-of-ownership timeline, which can delay closing and affect lender commitment letter expiration.

💡 SBA lenders increasingly require that the accreditor's change-of-ownership approval be obtained or substantially in process before issuing a final commitment letter for proprietary school acquisitions. Buyers should begin informal pre-notification conversations with CAAHEP or ABHES before the LOI is signed where possible. Sellers should resist seller note terms shorter than 24 months given that enrollment stabilization following an ownership change typically takes one to two full cohort cycles. The seller note deferral period is a key negotiating lever — sellers should push back on immediate repayment obligations that begin before the accreditor review is complete.

Earnout Provisions

Defines any contingent compensation tied to post-closing performance milestones, which are common in medical assisting school acquisitions given the risk that accreditor change-of-ownership review or enrollment disruption could reduce the school's value relative to the signed purchase price.

💡 Earnouts tied to accreditor approval and Title IV transfer are widely accepted in proprietary school transactions because both parties share risk in outcomes that neither can fully control. Sellers should insist on clearly defined measurement metrics and milestone timelines, and should negotiate for a portion of the earnout to be held in escrow rather than paid at closing. Buyers should include language preventing Seller from taking any action post-closing that could jeopardize accreditor standing, since a seller's failure to cooperate with site visit preparation or externship transitions could prevent earnout milestones from being met.

Accreditation and Regulatory Contingencies

Establishes buyer protections related to the school's accreditation status, Department of Education program participation, and any pending regulatory actions. This is the most distinctive and consequential section of a medical assisting school LOI and must be drafted with precision.

💡 Sellers should be transparent about any historical accreditor correspondence, including resolved corrective action plans, as buyers will discover this through accreditor records requests during due diligence. Concealing past accreditor notices is the single most common deal-killer in proprietary school transactions. Buyers should request copies of the most recent accreditor site visit report and any correspondence with the Department of Education's Federal Student Aid office before signing the definitive agreement, and should consider requiring a bring-down certificate at closing confirming no new regulatory actions have been initiated.

Due Diligence Period and Access

Specifies the length of the due diligence period, the materials to be provided by the seller, and the access rights granted to the buyer and the buyer's advisors. Medical assisting school due diligence requires review of education-specific documentation that is not part of a standard business acquisition checklist.

💡 Sixty days is a minimum for medical assisting school due diligence given the volume of regulatory documentation involved. Buyers using SBA financing should build in an additional 15–30 day buffer to allow for lender underwriting review of the accreditation and Title IV materials. Sellers should organize all due diligence materials in a virtual data room before the LOI is signed to avoid delays. Both parties should agree in advance on whether student record access will be de-identified to comply with FERPA, and on how externship site agreements will be reviewed given their confidential nature.

Exclusivity and No-Shop Provision

Prevents the seller from soliciting or accepting offers from other buyers during the due diligence and negotiation period, giving the buyer the time needed to complete accreditor pre-notification and regulatory review without risk of being outbid.

💡 Seventy-five days of exclusivity is appropriate for medical assisting school transactions because the accreditor pre-notification process and SBA lender review of Title IV participation materials routinely take four to six weeks. Sellers should push back on exclusivity periods longer than 90 days without a clear milestone structure showing Buyer's progress. Buyers should include a provision requiring Seller to notify Buyer immediately if the Seller receives any unsolicited offer from a third party during the Exclusivity Period.

Seller Transition and Non-Compete

Addresses the seller's post-closing role, transition consulting obligations, and restrictions on re-entering the medical assisting training market. Given that many medical assisting school sellers are the director of education and primary externship relationship manager, a well-drafted transition section is essential to preserving school value after closing.

💡 The 12-month transition period is the market standard for founder-owned medical assisting schools where the seller has deep institutional relationships with accreditors, externship sites, and healthcare employer partners. Sellers should negotiate for a paid consulting rate rather than unpaid transition support, and should define the scope of consulting obligations clearly to avoid indefinite post-closing demands. Buyers should tie a portion of the earnout to successful completion of the transition milestones listed above. Non-compete radius and duration should reflect local market geography — a 25-mile radius and 3-year term is standard in most metropolitan markets.

Representations and Warranties Preview

Provides a high-level preview of the key representations and warranties that will be included in the definitive agreement, signaling the buyer's expectations for seller disclosure quality and giving the seller an opportunity to surface known issues before full due diligence begins.

💡 Sellers should use the representations and warranties preview in the LOI as an opportunity to proactively disclose any known issues — a resolved corrective action plan from three years ago is far less damaging when disclosed upfront than when discovered by a buyer's accreditation counsel during due diligence. Buyers should insist on a survival period of at least 36 months for accreditation and Title IV-related representations given that regulatory consequences in the proprietary school sector can emerge 12–24 months after closing. Indemnification caps and baskets should be negotiated to reflect the specific risk profile of the school's regulatory history.

Closing Conditions and Timeline

Defines the conditions that must be satisfied before closing can occur and establishes a target closing timeline that accounts for the accreditor change-of-ownership review process, which is the most significant timing variable in medical assisting school acquisitions.

💡 Accreditor change-of-ownership review timelines vary significantly — ABHES typically requires 60–90 days from receipt of a complete change-of-ownership application, while CAAHEP timelines depend on whether the new owner has prior accreditation experience. Buyers should not schedule a hard closing date until they have received informal guidance from the accreditor on expected review duration. Sellers should resist closing condition language that gives buyers unlimited time to satisfy accreditor conditions, as this can indefinitely delay closing. A mutual termination right triggered 180 days after the LOI date is a reasonable backstop for both parties.