Letter of Intent Template for Acquiring a Weight Loss Clinic

Purchase Price and Valuation Basis

Establishes the proposed acquisition price, the valuation methodology used to arrive at it, and how EBITDA has been calculated — including any add-backs the buyer is accepting or disputing. For weight loss clinics, this section must address how GLP-1 program revenue has been treated, whether owner-physician compensation has been normalized to a market-rate medical director salary, and whether any revenue from compounded semaglutide or tirzepatide programs has been risk-adjusted given regulatory uncertainty around compounding pharmacy access.

💡 Sellers in this market frequently present EBITDA without normalizing owner-physician salaries to market rate, which can artificially inflate margins by $150K–$250K. Insist on normalizing to a $180K–$250K medical director equivalent before accepting any multiple. If a meaningful portion of revenue comes from compounded GLP-1 programs, build in explicit language reserving your right to adjust the purchase price if diligence reveals compliance exposure or if the compounding pharmacy relationship is non-transferable. Sellers who built practices during the 2022–2024 GLP-1 boom may be presenting peak-year revenue — request a 3-year revenue trend and weight your multiple against normalized recurring revenue, not one-year highs.

Deal Structure and Consideration Breakdown

Defines how the total purchase price will be funded and paid, including the allocation between cash at closing, seller note, earnout, and equity rollover if applicable. For SBA-financed transactions, this section must align with SBA 7(a) program requirements including seller note standby provisions. For PE-backed buyers, it should address equity rollover mechanics and any management incentive structure for the selling physician if they are staying on post-close.

💡 SBA lenders will require the seller note to be on full standby for the first 24 months, meaning the seller receives no principal or interest payments during that period. Sellers unfamiliar with SBA deals sometimes resist this — educate early. Earnouts in weight loss clinic deals are most defensible when tied to specific, measurable metrics like 90-day patient retention rates or active membership counts rather than gross revenue, which can be manipulated through program pricing changes. If the seller is a physician staying on as medical director post-close, structure a portion of earnout through their employment agreement rather than the purchase agreement to simplify accounting and reduce dispute risk.

Asset vs. Entity Purchase

Specifies whether the transaction is structured as an asset purchase or a stock or membership interest purchase. This is a critical structural decision for medical practices due to state corporate practice of medicine laws, DEA registration transferability, and the risk of inheriting undisclosed liabilities including prior malpractice claims, HIPAA violations, or state medical board actions.

💡 Asset purchases are strongly preferred in healthcare acquisitions because DEA registrations do not transfer — the acquiring entity must obtain its own registration, which takes planning time. Similarly, most state medical licenses and medical director agreements are personal and require re-credentialing. Identify early in the process which licenses are entity-level versus provider-level and build appropriate closing conditions around new registrations being in place before funds transfer. Sellers sometimes push for stock purchases to benefit from capital gains treatment — consult your tax advisor on whether a 338(h)(10) election could bridge the gap.

Due Diligence Period and Access

Defines the length and scope of the buyer's due diligence period, the categories of information to be provided, and the protocols for accessing patient data and clinical records in compliance with HIPAA. For weight loss clinics, diligence scope should explicitly include clinical compliance, prescribing records, DEA registration status, and payer contract review.

💡 Sixty days is the appropriate standard for a medical practice with clinical compliance complexity. Push back on sellers who offer 30 days — a weight loss clinic with GLP-1 prescribing, telehealth components, and multiple providers needs adequate time for proper compliance review. Hire a healthcare attorney to review DEA and state prescribing compliance specifically; this is not a task for a general business attorney. Request a patient cohort analysis broken down by enrollment month showing 30-, 60-, 90-day, and 12-month retention — this is the single most important data set for validating recurring revenue claims in a membership or program-based clinic.

Exclusivity and No-Shop Provision

Establishes the period during which the seller agrees not to solicit, entertain, or negotiate with other potential buyers. This is the buyer's primary protection against being used as a stalking horse while the seller shops a higher offer.

💡 Sixty days is standard for a deal with this level of clinical complexity. Sellers represented by experienced healthcare brokers may push for 30–45 days; resist going below 45 if you have SBA financing in process, as lender timelines alone can consume that window. If the seller is reluctant to grant exclusivity, that is a signal worth noting — it may indicate undisclosed competing interest or uncertainty about willingness to close. You can offer a modest earnest money deposit ($25K–$50K) held in escrow as consideration for a clean 60-day exclusivity window.

Earnout Structure and Patient Retention Metrics

Defines the mechanics, measurement criteria, and payment schedule for any contingent consideration tied to post-closing business performance. In weight loss clinic acquisitions, earnouts are most commonly tied to patient retention, active membership counts, or revenue milestones that validate the sustainability of the pre-closing patient base.

💡 Never tie an earnout to gross revenue without also including a retention rate floor — a buyer can hit revenue targets by enrolling high volumes of patients who churn within 60 days, which creates unsustainable financials. The most seller-friendly earnouts are easy to measure and hard to manipulate; patient retention cohorts fit this profile better than revenue alone. Sellers should push for earnout metrics they can partially influence post-closing — if they are staying on as medical director or transition consultant, build in explicit commitments from the buyer around staffing, marketing spend, and program continuity that protect the seller's ability to hit the targets.

Key-Person and Provider Transition Plan

Addresses the risk that the practice's clinical operations, patient relationships, and regulatory standing are dependent on the selling physician. This section establishes expectations for the seller's post-closing involvement as a transition consultant or medical director and defines conditions under which a replacement provider must be in place before closing.

💡 This is the most frequently under-negotiated section in weight loss clinic LOIs and the most likely source of post-closing disputes. If the selling physician is the sole prescriber and only DEA registrant, the practice has no regulatory standing without them. Do not allow yourself to close without either a replacement provider fully credentialed or a contractually binding transition agreement with meaningful penalties for early departure. For SBA loans, lenders will often require the seller to stay involved for 12 months as a condition of loan approval — use this as leverage to normalize the expectation. Non-solicitation clauses should explicitly cover both patients and clinical staff, as departing physicians sometimes recruit staff to new competing practices.

Representations and Warranties Outline

Summarizes the categories of representations and warranties the buyer will require the seller to make in the definitive agreement. For medical weight loss clinics, these representations must extend beyond standard business reps to cover clinical compliance, prescribing practices, and regulatory standing.

💡 Healthcare acquisitions warrant longer rep and warranty survival periods than standard business deals because regulatory violations — particularly around prescribing compliance — can take 12–18 months to surface post-closing. A 24-month survival period is standard and appropriate. Sellers will often push back on representations related to GLP-1 compounding compliance because this is a genuinely gray area where federal and state rules have been in flux — acknowledge the uncertainty in the reps language by tying the rep to 'Seller's knowledge and reasonable belief that all compounding relationships were compliant with applicable regulations as of the date of this LOI' rather than an unqualified warranty.

Confidentiality and Employee Notification Protocol

Establishes the mutual obligation to keep the transaction confidential and defines the protocol for notifying employees, clinical staff, referral partners, and patients — a particularly sensitive issue in healthcare businesses where premature disclosure can trigger staff departures, patient attrition, and referral source disruption.

💡 In medical weight loss clinics, premature disclosure is particularly damaging because patients have ongoing medication programs and may panic about prescription continuity if they learn of a change in ownership without reassurance. Build the patient communication plan into your due diligence workplan so it is ready to deploy at closing, not drafted in a rush. Staff confidentiality is equally important — clinical staff who learn of a sale from gossip rather than leadership are more likely to begin job searching. Consider giving key clinical employees a retention bonus tied to staying through the 6-month post-closing period, which can be built into the transaction budget.