Letter of Intent Template for Acquiring a Speech Therapy Practice

1. Parties and Practice Identification

Clearly identify the buyer entity, the seller, and the legal name of the speech therapy practice being acquired. Specify whether the transaction is structured as an asset purchase or equity purchase of the practice entity, as this has significant implications for HIPAA business associate agreements, payer credentialing transfers, and Medicaid/Medicare provider number portability.

💡 Asset purchases are strongly preferred for speech therapy acquisitions because they allow the buyer to avoid inheriting unknown billing audit liabilities, unresolved insurance overpayment demands, or prior HIPAA violations. If the seller insists on an equity sale — often to preserve Medicaid/Medicare provider numbers — require thorough billing audit representations and warranty coverage. Confirm with healthcare counsel whether the seller's payer contracts are assignable or require re-credentialing under an asset structure, as this can affect revenue continuity in the first 60–120 days post-close.

2. Purchase Price and Valuation Basis

State the proposed purchase price, the EBITDA or SDE basis on which it was calculated, the implied valuation multiple, and how owner compensation add-backs were treated. For speech therapy practices, it is critical to specify whether the valuation reflects the owner's clinical hours as a cost (replacement cost of an employed SLP) rather than as pure add-back profit.

💡 The most common valuation dispute in SLP practice acquisitions centers on how much of the owner's compensation is added back. If the owner performs 40%+ of billable hours, the market replacement cost of that clinical labor must be deducted from EBITDA before applying a multiple — otherwise you are overpaying for revenue that disappears at close. Push for a quality of earnings adjustment that separates management value from clinical production value. Also confirm that school district contract revenue is treated as recurring only if contracts have been renewed within the past 12 months with multi-year terms.

3. Deal Structure and Payment Terms

Outline the proposed financing structure, equity contribution, seller note terms, and any earnout mechanics. Speech therapy acquisitions commonly use SBA 7(a) loans for the majority of the purchase price, with seller notes and earnouts structuring the gap between lender requirements and total deal value.

💡 SBA lenders will require the seller note to be on full standby for a minimum of 24 months — communicate this to sellers early to avoid late-stage surprises. Earnouts for speech therapy practices should be tied to both revenue retention AND clinician headcount, because revenue without the clinical staff to deliver it is not sustainable. Avoid tying earnouts solely to EBITDA targets, as post-close operational decisions by the buyer (e.g., hiring additional admin staff, investing in a new EHR) can unfairly reduce the seller's earnout payout. If the seller is staying on as a clinical director or referral development lead, ensure their compensation is separately documented outside the earnout calculation.

4. Seller Transition and Clinical Involvement

Define the seller's post-close role, duration of clinical and operational transition support, and any equity rollover arrangement. This section is especially important for speech therapy practices where the founding SLP's relationships with referral sources — pediatricians, school district coordinators, ENT specialists — represent a substantial portion of enterprise value.

💡 Sellers who are reluctant to commit to a structured transition often signal that the practice's referral relationships are more personally tied to them than disclosed. If the seller resists a 12-month transition commitment, reduce the goodwill premium in the valuation or increase the earnout weighting tied to referral retention. For PE-backed roll-up buyers, an equity rollover of 10–20% with a defined buyout trigger in 24–36 months can align seller incentives without requiring a large transition salary.

5. Exclusivity and Timeline

Establish the exclusivity period during which the seller agrees not to solicit or entertain competing offers, and define the key milestones from signed LOI through due diligence completion and target close date.

💡 For SBA-financed deals, 60–75 days from LOI to close is realistic only if the SBA package is submitted within the first two weeks of exclusivity. Build in a 15-day extension option triggered by SBA processing delays or payer credentialing holdups — both are common in healthcare acquisitions. Sellers of speech therapy practices are often emotionally protective of staff and patients; shorter exclusivity windows with clear milestone deadlines signal buyer seriousness and professionalism.

6. Due Diligence Conditions and Access

Specify the due diligence scope, document access requirements, and the key contingencies that must be satisfied for the buyer to proceed to a definitive agreement. For speech therapy practices, due diligence must cover clinical, financial, compliance, HR, and referral relationship dimensions.

💡 Billing compliance and payer audit history are the highest-risk areas in speech therapy due diligence. Request a minimum of three years of billing records, any payer correspondence, and documentation of how any prior audit findings were resolved. Do not proceed to a definitive agreement without confirming the status of any open Medicaid or insurance audits — these can result in clawback demands that exceed the seller note value. Engage a healthcare-focused CPA or billing compliance consultant as part of your due diligence team, not just a generalist M&A advisor.

7. Non-Compete and Non-Solicitation

Define the geographic scope, duration, and prohibited activities covered by the seller's non-compete and non-solicitation obligations. For an SLP practice owner, this must address both clinical practice and referral source solicitation to protect the practice's core value drivers.

💡 Non-compete enforceability varies significantly by state, and some states — including California — do not enforce them at all. Engage local healthcare counsel to confirm enforceability before relying on non-compete protection in your valuation. In markets with SLP workforce shortages, non-solicitation of staff is often more practically important than geographic non-compete. Consider tying a portion of the seller note to non-compete compliance, creating a financial incentive for adherence beyond legal enforceability.

8. Confidentiality and Non-Binding Nature

Affirm the confidentiality obligations of both parties regarding deal terms, patient information, and staff communications, and clarify which provisions of the LOI are binding versus non-binding.

💡 The confidentiality provision in a speech therapy LOI carries additional weight because of HIPAA. Ensure the buyer's due diligence team — including financial advisors, lenders, and attorneys — executes business associate agreements before accessing any patient records or clinical documentation. Sellers should be cautioned not to disclose the pending sale to clinical staff too early, as SLP attrition risk is highest in the period between LOI execution and close when uncertainty is greatest.