Letter of Intent Template for Acquiring a Podiatry Practice

Parties and Practice Identification

Identifies the buyer entity, the seller (typically the physician-owner individually and/or their professional corporation or LLC), and the specific practice assets or entity being acquired. In podiatry, confirm whether the transaction is an asset purchase or equity purchase, as this affects liability exposure for prior billing and malpractice claims.

💡 Most podiatry acquisitions are structured as asset purchases to avoid assuming unknown liabilities — including Medicare overpayment exposure, prior coding errors, or undisclosed malpractice claims. Sellers often prefer equity sales for tax treatment, so be prepared to negotiate a gross-up in purchase price if agreeing to an equity structure. Confirm the state's corporate practice of medicine laws before naming the buyer entity, as certain states require the buyer to be a licensed physician or a physician-owned entity.

Purchase Price and Valuation Basis

Establishes the proposed total consideration, the EBITDA multiple applied, and how the seller's discretionary earnings or adjusted EBITDA was calculated. In podiatry practices, this section should explicitly reference the trailing twelve-month collections, the physician compensation addback methodology, and any adjustments for one-time revenue items like pandemic-era relief funds or non-recurring surgical cases.

💡 Podiatry practice valuations typically range from 3x–5.5x adjusted EBITDA. Practices with a single physician generating 90%+ of revenue will price toward the lower end; those with at least one associate DPM, strong orthotics revenue, and commercial payer mix domination can justify 4.5x–5.5x. Sellers frequently inflate addbacks by including discretionary personal expenses — car payments, personal health insurance, retirement contributions — so buyers should require a normalized compensation benchmark (typically $150,000–$200,000 for a full-time podiatrist) rather than allowing uncapped addbacks.

Transaction Structure and Consideration Allocation

Defines how the purchase price will be paid, including cash at closing, SBA loan proceeds, seller note amount, and any earnout component. In podiatry, it is standard to include a seller note and/or earnout to bridge valuation gaps arising from physician-dependent revenue and payer mix uncertainty.

💡 SBA 7(a) loans for podiatry acquisitions typically require a 10–15% buyer equity injection and will require the selling physician to execute a personal guarantee waiver and provide 2–3 years of practice tax returns. Sellers should negotiate earnout measurement criteria that account for factors within their control — i.e., patient retention attributable to their active transition efforts — and exclude revenue shortfalls caused by payer rate changes, new competition, or buyer operational decisions. A seller note of 5–10% of the purchase price is often required by SBA lenders as evidence of seller confidence in the transaction.

Exclusivity and No-Shop Provision

Grants the buyer an exclusive negotiating window during which the seller agrees not to solicit or entertain offers from other potential buyers. This is one of the few binding provisions in a typical LOI and is critical for buyers who will invest significant time and money in healthcare-specific due diligence.

💡 Forty-five to sixty days is standard for podiatry acquisitions given the complexity of healthcare due diligence — payer credentialing review, billing compliance audit, and state corporate practice of medicine analysis all require specialized advisors. Sellers should resist exclusivity periods exceeding 60 days without a hard closing deadline or automatic termination clause. Buyers should tie the exclusivity extension right to specific documented diligence milestones, not open-ended negotiation.

Due Diligence Scope and Access

Outlines the categories of information the buyer requires access to during the diligence period, including financial records, payer contracts, credentialing files, billing data, and compliance documentation. In podiatry, this section should be more detailed than a typical lower middle market LOI due to healthcare-specific regulatory exposure.

💡 Buyers should insist on seeing CPT code-level billing data, not just summary revenue figures. This allows analysis of whether revenue is concentrated in high-risk codes subject to Medicare audit scrutiny (e.g., routine foot care billed under diabetic care exemptions). Sellers should require a mutual non-disclosure agreement before sharing any patient-level data and ensure all PHI disclosures are structured to comply with HIPAA's business associate agreement requirements. Billing compliance red flags — high denial rates, frequent downcoding, large accounts receivable over 120 days — are best identified at this stage before purchase price is finalized.

Representations and Warranties Preview

Identifies the key representations the seller will be expected to make in the final purchase agreement, alerting the seller to areas where they must disclose known issues or face post-closing indemnification liability. In podiatry, representations around billing compliance, licensure, and payer contract assignability are especially material.

💡 Healthcare-specific reps are non-negotiable for any sophisticated buyer. Sellers should conduct an internal compliance review before LOI execution to identify any billing exposure — undisclosed overpayments, improper modifier usage, or upcoding — and either remediate or disclose proactively. Undisclosed compliance issues discovered post-closing expose sellers to indemnification claims that can claw back significant portions of the purchase price. Buyers should negotiate a survival period of 3–5 years for healthcare compliance representations given Medicare's look-back audit window.

Physician Transition and Employment Agreement

Outlines the terms under which the selling physician will remain engaged post-closing to support patient and referral source transition, and defines the earnout linkage to their post-closing clinical activity. This is the most deal-critical section in podiatry acquisitions where the seller-physician is the primary revenue driver.

💡 The transition agreement is where most podiatry deals succeed or fail. Buyers should structure physician compensation post-closing to incentivize active patient handoff — a declining compensation scale tied to patient transfer milestones is more effective than a flat salary. Sellers should negotiate floor compensation guarantees that do not fluctuate based on patient volume during the transition period, as patient scheduling decisions post-acquisition are partially outside their control. Non-compete scope should be reviewed by a healthcare attorney in the practice's state, as enforceability varies significantly and overly broad non-competes can deter a selling physician from signing.

Conditions to Closing

Lists the material conditions that must be satisfied before either party is obligated to close the transaction, including financing, regulatory approvals, payer credentialing, and lease assignment. In podiatry, payer re-credentialing timelines are frequently underestimated and should be addressed explicitly.

💡 Medicare re-credentialing for a new practice entity can take 60–120 days and will interrupt billing if not managed proactively. Buyers and sellers should agree on a billing transition arrangement — often the seller continues to bill under their NPI during re-credentialing with proceeds flowing to the buyer — and document this in the LOI to prevent disputes. Buyers should also confirm whether the practice's commercial payer contracts include assignment provisions or require re-negotiation, as some large commercial insurers treat an ownership change as a contract termination event.

Confidentiality

Establishes mutual obligations to protect the confidentiality of transaction discussions, practice financial information, and patient data. In podiatry, HIPAA compliance requirements layer on top of standard confidentiality provisions and must be explicitly addressed.

💡 Staff disclosure is the most common confidentiality breach in podiatry practice sales and can trigger key employee departures that reduce practice value before closing. Sellers should negotiate a mutual obligation on the buyer to maintain confidentiality with any third-party advisors (lenders, attorneys, accountants) through their own NDAs. Buyers should avoid contacting the practice's payer representatives or referral sources directly until the transaction has been announced in a controlled manner, typically at or immediately after closing.

Non-Binding Nature and Governing Law

Confirms that the LOI is non-binding except for specified binding provisions (exclusivity, confidentiality, and expense allocation), and establishes the governing law for any disputes. This section prevents either party from claiming breach of contract if negotiations terminate before a definitive agreement is reached.

💡 Sellers occasionally attempt to argue that an LOI creates binding obligations when a buyer walks away after due diligence. The non-binding language must be explicit and unambiguous. However, buyers should be cautious about exercising termination rights on pretextual grounds after the seller has taken the practice off market — courts in some states have found implied good faith obligations even in non-binding LOIs. The binding exclusivity and confidentiality provisions should be separated into a standalone section with a clear heading to avoid any ambiguity about their enforceability.