Letter of Intent Template for Acquiring an Optical Retail Business

Parties and Transaction Overview

Identifies the buyer entity, seller entity, and the specific business assets or equity interests being acquired. In optical retail, it is critical to specify whether this is an asset purchase or stock purchase, as asset purchases are far more common and allow buyers to avoid assuming unknown billing liabilities or legacy insurance credentialing issues.

💡 Sellers may prefer a stock sale for tax efficiency, but buyers should push for an asset purchase structure to avoid assuming unknown VSP or EyeMed billing liabilities, unresolved HIPAA compliance issues, or legacy employment claims. If the business operates under a professional corporation, involve a healthcare attorney early to navigate any corporate practice of medicine restrictions in the state.

Purchase Price and Valuation Basis

States the proposed total purchase price, the valuation methodology used to arrive at it, and how the price relates to the business's EBITDA, revenue, or a combination of both. Optical retail practices in the lower middle market typically trade at 2.5x–4.5x EBITDA, and the LOI should anchor the price to a specific trailing twelve-month EBITDA figure to avoid post-LOI disputes if financials shift.

💡 Separating frame inventory from the enterprise purchase price is one of the most important LOI mechanics in optical retail. Inventory values can range from $40,000 to over $200,000 and often include aged or slow-moving frames. Buyers should insist on a pre-close physical count and reserve the right to exclude inventory older than 24 months or frames from discontinued lines. Sellers will push to include all inventory at cost — negotiate hard for a cap or an aging discount schedule.

Deal Structure and Payment Terms

Outlines how the Purchase Price will be funded, including the allocation between SBA financing, buyer equity, seller notes, and any earnout provisions. Optical retail acquisitions are SBA 7(a) eligible, and most lower middle market deals are structured with an SBA loan covering 70–80% of the purchase price, a buyer equity injection of 10–20%, and a seller note of 10–20% on standby.

💡 Sellers sometimes resist seller notes, particularly those with a 24-month standby period required by SBA guidelines. Frame the seller note as a sign of the seller's confidence in the transition and a mechanism to protect against any post-close working capital shortfalls. If the deal includes a high-performing associate OD or a second location, consider whether an earnout tied to 12–24 month patient retention or revenue performance is appropriate in lieu of a larger seller note.

Earnout Provisions (if applicable)

Defines any contingent purchase price tied to post-close business performance, most commonly used when the practice commands a premium multiple or when the owner-optometrist's departure creates meaningful revenue risk. Earnouts in optical retail are typically tied to patient visit volume, optical dispensary revenue, or total net revenue over a 12–24 month post-close measurement period.

💡 Buyers should define 'net revenue' precisely, excluding any insurance plan revenue attributable to new contracts added post-close and any revenue from a new associate OD hired by the buyer. Sellers should push for audit rights and a clear methodology statement. If the seller is the sole OD and will be exiting within 12 months, consider whether an earnout is even achievable — in that scenario, the purchase price should be discounted at closing rather than deferred through an earnout.

Due Diligence Period and Access

Establishes the length of the due diligence period, the categories of information the buyer will review, and the confidentiality obligations that govern access to sensitive practice data including patient records, insurance contracts, and staff compensation.

💡 Sixty days is the minimum realistic due diligence window for optical retail given the complexity of insurance contract review and inventory assessment. Sellers should insist that patient-identifiable information is provided only in de-identified aggregate form until a definitive purchase agreement is signed. Buyers should prioritize insurance billing compliance review early — VSP and EyeMed audits that surface after closing can result in significant claw-back liabilities that are difficult to recover from a seller.

Transition and Seller Consulting Arrangement

Defines the seller's commitment to remain involved post-close to support patient retention, staff continuity, and operational handoff. In optical retail, a meaningful transition period is essential given the personal nature of patient relationships and the complexity of vision insurance credentialing.

💡 The non-compete radius and duration are among the most negotiated terms in optical retail LOIs. Buyers serving dense urban markets may push for a shorter radius but a longer duration; suburban or rural buyers should prioritize radius over duration. If the seller is also the credentialed OD, the transition period may need to extend until the incoming OD completes credentialing with all major vision plans — a process that can take 90–180 days with VSP alone. Factor this into the TCA timeline.

Exclusivity and No-Shop Period

Prevents the seller from soliciting or entertaining other offers during the due diligence and negotiation period, giving the buyer time and confidence to invest in deal-specific due diligence costs such as legal review, SBA lender engagement, and inventory appraisal.

💡 Sellers represented by optical-focused business brokers will sometimes push for a 45-day exclusivity window, arguing that multiple interested buyers exist. Buyers should hold firm at 60 days minimum given the insurance credentialing and inventory review complexity inherent in optical retail deals. If the seller insists on a shorter window, consider whether the LOI can include a 30-day automatic extension triggered by the SBA lender's processing timeline.

Conditions to Closing

Lists the material conditions that must be satisfied before the buyer is obligated to close the transaction. In optical retail, these conditions should specifically address vision insurance contract assignment, lease assignment, and OD licensure continuity.

💡 Vision insurance contract continuity is the single most operationally critical closing condition in optical retail. VSP and EyeMed do not automatically transfer on asset sales — the incoming OD must apply for credentialing independently, and this process can take months. Buyers should begin the credentialing process in parallel with due diligence, not after LOI execution. If credentialing is not complete by the target closing date, negotiate a closing escrow or a delayed closing mechanic rather than proceeding without insurance contract continuity.

Confidentiality and Non-Disclosure

Reaffirms the mutual obligation of both parties to keep the terms of the LOI and all shared business information strictly confidential, protecting the seller's staff and patient relationships and the buyer's negotiating position.

💡 Optical retail sellers are acutely sensitive to confidentiality breaches because a rumor of a pending sale can trigger staff departures or patient attrition — both of which directly reduce the value of the business the buyer is acquiring. Buyers should agree to strict confidentiality protocols and, if they intend to conduct on-site visits during due diligence, should coordinate timing carefully with the seller to avoid raising suspicion among staff or patients.

Non-Binding Nature and Binding Provisions

Clarifies which sections of the LOI are legally binding and which are expressions of intent only, ensuring both parties understand their obligations prior to a definitive purchase agreement.

💡 Always designate confidentiality and exclusivity as binding provisions, even in a non-binding LOI. Courts have enforced these provisions independently of the broader deal, and they provide meaningful protection if negotiations break down. Buyers should also consider including a break-up fee provision — typically $10,000–$25,000 — payable by the seller if they exit exclusivity without cause after the buyer has incurred material due diligence costs.