Letter of Intent Template for Buying or Selling an Urgent Care Clinic

Parties and Recitals

Identifies the buyer entity, seller entity (which may be a professional corporation, LLC, or MSO depending on state CPOM law), and the clinic or clinics being acquired. This section establishes whether the transaction is structured as an asset purchase, equity purchase of the MSO entity, or a hybrid structure.

💡 Clarify the entity structure from the outset. In states with strict CPOM laws (California, Texas, New York), the buyer may need to acquire the MSO entity rather than the professional corporation that holds the medical license. Sellers should confirm that the entity being sold is the one that holds the payer contracts, facility lease, and employment agreements, or clearly identify which entity holds each asset.

Purchase Price and Valuation Basis

States the proposed purchase price, the EBITDA or revenue multiple being applied, and the financial period on which the valuation is based. Urgent care clinics in the $1M–$5M revenue range typically trade at 3.5x–6x trailing twelve-month adjusted EBITDA, with premiums for strong commercial payer mix and multi-location platforms.

💡 Sellers should push to lock in the multiple rather than the fixed dollar amount, so that if adjusted EBITDA shifts slightly during due diligence, the price adjusts proportionally rather than collapsing. Buyers should insist on a working capital peg and clear definitions of add-backs, since owner-physician compensation, personal expenses run through the business, and one-time COVID-related revenue are common adjustment disputes in urgent care deals.

Deal Structure and Payment Terms

Defines how the purchase price will be funded, including the proportion allocated to SBA 7(a) financing, seller financing, equity rollover, and any earnout tied to post-closing clinical or financial performance metrics.

💡 Sellers should negotiate earnout metrics that are within their operational control and clearly defined in the definitive agreement. Patient visit volume and commercial payer mix percentage are preferable to net revenue metrics, which can be manipulated by billing delays or payer adjustments. Buyers using SBA 7(a) financing should confirm that the lender is comfortable with healthcare businesses and understands payer contract assignment requirements, as not all SBA lenders have urgent care experience.

Payer Contract Contingency

Addresses the critical issue of whether existing payer contracts — including commercial insurance, Medicare, Medicaid, workers' compensation, and employer/occupational health agreements — can be assigned to the buyer or will require renegotiation upon change of ownership.

💡 This is often the single most deal-critical contingency in urgent care acquisitions. Buyers should request copies of all payer contracts as part of initial due diligence and have healthcare M&A counsel review each contract for change-of-control language. Sellers should begin notifying payers of the pending transition early in the process — waiting until closing often triggers credentialing delays of 60–120 days that can interrupt cash flow for the new owner.

Provider and Staff Retention

Outlines the buyer's expectations regarding retention of physicians, nurse practitioners, physician assistants, and key administrative staff, including the seller-physician's role during the transition period.

💡 Sellers whose clinical model is highly dependent on the owner-physician will face significant buyer scrutiny here. If the seller-physician plans to retire, buyers may require a longer transition period — often 12–18 months — or a larger earnout tied to provider retention metrics. Sellers should proactively reduce owner-physician dependency before going to market by expanding mid-level provider staffing, which directly increases clinic valuation multiples.

Due Diligence Period and Access

Specifies the length of the due diligence period, the types of information the buyer is entitled to review, and the process for accessing clinical, financial, regulatory, and operational records.

💡 Sixty days is standard for an urgent care deal, but buyers dealing with multi-location clinics or complex MSO structures should negotiate 75–90 days. Sellers should prepare a virtual data room before going to market — having billing records, payer contracts, and licensure documents organized in advance dramatically reduces due diligence timelines and signals operational sophistication to buyers. Both parties should agree on a HIPAA-compliant data sharing protocol to protect patient information during the review process.

Exclusivity and No-Shop Period

Grants the buyer exclusive negotiating rights for a defined period during which the seller cannot solicit, entertain, or accept competing offers from other potential acquirers.

💡 Sixty days is reasonable for urgent care acquisitions given the complexity of payer contract review and provider credentialing analysis. Sellers should resist exclusivity periods longer than 75 days without reciprocal buyer milestones — for example, requiring the buyer to complete financial due diligence by day 30 and submit a markup of the purchase agreement by day 50. This prevents buyers from using exclusivity to lock out competing offers while conducting a slow or uncommitted diligence process.

Confidentiality and HIPAA Compliance

Establishes the obligation of both parties to maintain the confidentiality of proprietary business information and patient data accessed during due diligence, with specific reference to HIPAA requirements applicable to healthcare business reviews.

💡 HIPAA compliance is non-negotiable in healthcare acquisitions. Buyers should execute a BAA before accessing any system that contains protected health information, including the clinic's EHR or practice management system. Sellers should ensure that any financial data shared in aggregate form is de-identified before sharing, particularly for reporting purposes or competitive benchmarking provided to buyers.

Conditions to Closing

Lists the material conditions that must be satisfied before either party is obligated to close the transaction, including regulatory approvals, licensing transfers, payer contract assignments, and financing contingencies.

💡 The material adverse change (MAC) clause is particularly important in urgent care given the potential for rapid shifts in patient volume driven by seasonal illness patterns, payer reimbursement changes, or the loss of a key employer health contract. Sellers should define MAC narrowly to exclude industry-wide events (e.g., payer rate compression affecting all urgent care operators) and limit MAC triggers to clinic-specific operational events.

Governing Law and Binding Effect

Specifies which state's laws govern the LOI, identifies which provisions are legally binding (confidentiality, exclusivity, governing law) versus non-binding (purchase price, deal structure), and establishes the LOI's role as a precursor to a definitive agreement.

💡 Even though most of the LOI is non-binding, courts have occasionally found implied obligations based on LOI language — particularly around good faith negotiation. Both parties should have healthcare M&A counsel review the LOI before execution. Sellers should confirm that the governing law matches the state where the clinic operates, as CPOM regulations and healthcare licensing requirements are state-specific and the governing law choice can affect interpretation of compliance obligations.