Letter of Intent Template for Acquiring a Nutrition Counseling Practice

Parties and Transaction Overview

Identifies the buyer entity, seller entity, and the business being acquired. For nutrition practices, this should specify whether the acquisition targets the legal entity or its assets, which has direct implications for assuming insurance payer contracts, malpractice history, and existing staff employment agreements.

💡 Asset purchases are strongly preferred over entity acquisitions in healthcare services deals because they allow the buyer to avoid assuming undisclosed liabilities such as prior billing errors, overpayments to insurance payers, or unresolved HIPAA violations. Sellers may push for an entity sale to achieve more favorable capital gains tax treatment. Negotiate this point early and involve a healthcare transaction attorney to assess the risk profile of assuming the existing legal entity.

Purchase Price and Valuation Basis

States the proposed total consideration, the valuation methodology applied, and how the price was derived from the practice's financial performance. Nutrition practices typically trade at 2.5x–4.5x SDE depending on revenue mix, staff depth, and recurring revenue quality.

💡 Sellers of nutrition practices often understate add-backs related to owner compensation, personal vehicle use, and continuing education expenses. Buyers should build their own normalized EBITDA or SDE model from three years of tax returns and request a breakdown of revenue by payer type and service line. Practices with more than 40% revenue from a single insurance payer or a single employer wellness contract should be valued at the lower end of the multiple range to reflect concentration risk.

Deal Structure and Consideration Breakdown

Specifies how the purchase price will be funded, including any SBA loan, equity injection, seller note, and earnout components. Most nutrition practice acquisitions in this size range utilize SBA 7(a) financing with a seller note bridging the gap between appraised value and purchase price.

💡 SBA lenders will require the seller to remain on a standby seller note during the SBA loan term, meaning the seller receives no principal payments on their note for the first 24 months in many structures. Sellers should understand this restriction before signing the LOI. Earnouts tied to patient retention metrics or revenue targets are common in nutrition practice deals because a significant portion of practice goodwill is personal to the selling practitioner. Structure earnout measurement periods to begin after a 90-day transition period to avoid penalizing the seller for normal post-close attrition.

Earnout Structure and Performance Metrics

Defines the specific metrics, measurement period, payment schedule, and calculation methodology for any variable consideration tied to post-close performance. This section is critical in nutrition practice acquisitions where client retention risk is high during ownership transitions.

💡 Define 'active client' precisely in the LOI to avoid disputes during the earnout period. Sellers should negotiate for protections against buyer-caused attrition, such as price increases, service eliminations, or staff layoffs that reduce capacity. Buyers should cap the earnout at a percentage of the total purchase price, typically 10–20%, and tie metrics to revenue collections rather than gross billings, which can be inflated by uncollectable insurance claims in nutrition practices.

Due Diligence Period and Access

Establishes the length of the due diligence period, the information Seller must provide, and the process for raising material issues discovered during review. Nutrition practice due diligence is more complex than typical service businesses due to HIPAA requirements, insurance credentialing verification, and clinical record access.

💡 Request a HIPAA-compliant de-identified client census early in the process to assess client concentration, payer mix, and session frequency before committing to full due diligence costs. Verify directly with the practice's top insurance payers whether their contracts are assignable or require re-credentialing of the buyer, as some payers treat a change of ownership as a termination event requiring the buyer to re-apply and wait 60–120 days for credentialing approval. This gap can create significant revenue disruption at close.

Exclusivity and No-Shop Provision

Requires the seller to cease marketing the practice and negotiating with other potential buyers during the due diligence and documentation period. This protects the buyer's investment of time and money in due diligence.

💡 60 days is standard for lower middle market healthcare service transactions. Buyers with SBA financing should request 75–90 days because SBA lender processing timelines often extend due diligence cycles. Sellers should resist open-ended exclusivity and negotiate a clear termination right if the buyer fails to deliver a definitive purchase agreement within the exclusivity window.

Seller Transition and Consulting Agreement

Outlines the seller's expected post-close involvement in the practice, including client transition obligations, staff introduction, referral source handoffs, and any ongoing consulting arrangement. This section carries outsized importance in nutrition practices where the selling practitioner often holds the majority of physician referral relationships and client trust.

💡 Sellers who are actively providing clinical services at close represent a key-person risk. Buyers should require transition consulting as a condition of closing, not merely a post-close best effort. For practices where the owner conducts more than 50% of client sessions, consider extending the transition period to 12 months and structuring a portion of seller compensation as contingent on successful referral relationship transfers, measured by referral volume in months 6–12 post-close compared to the pre-close baseline.

Non-Compete and Non-Solicitation

Establishes restrictions on the seller's ability to compete with the practice or solicit clients, staff, or referral sources following the transaction. State law governs the enforceability of these provisions and healthcare-specific restrictions may apply.

💡 Telehealth-enabled nutrition practices present unique non-compete drafting challenges because client relationships may be geographically dispersed across multiple states. Buyers acquiring a practice with significant telehealth revenue should define the restricted territory to include all states in which the seller is currently licensed and providing services, not merely the physical office location. Sellers should negotiate carve-outs for academic teaching, writing, and speaking engagements that do not directly compete with clinical services.

Conditions to Closing

Lists the material conditions that must be satisfied before the transaction can close, including financing contingencies, regulatory approvals, and third-party consents. Nutrition practice deals have several industry-specific conditions related to licensure and payer credentialing.

💡 The insurance payer credentialing condition is the most frequently underestimated closing risk in nutrition practice acquisitions. Medicare and Medicaid medical nutrition therapy credentialing for a new provider entity can take 90–120 days and may require the practice to operate under a temporary billing arrangement during the gap period. Buyers should begin the credentialing process immediately upon LOI execution and structure the closing timeline to accommodate payer processing delays.

Confidentiality and Non-Disclosure

Confirms that both parties are bound by confidentiality obligations governing the use of information shared during due diligence, consistent with HIPAA requirements for protected health information and general business confidentiality for financial and operational data.

💡 Execute a standalone NDA with a Business Associate Agreement before sharing any documents that reference client names, diagnoses, or treatment histories. Even de-identified data shared during due diligence should be handled under a formal confidentiality framework to avoid HIPAA exposure for both parties. Sellers should confirm their broker or advisor is also subject to HIPAA-compliant confidentiality obligations before sharing billing records or client census data.