Creating a Letter of Intent When Buying a Dental Practice
The First Official Step Toward Ownership
Once you decide to buy a specific dental practice, what happens? Do you just call the owner or send them a friendly email? Of course not! The most effective and direct way to let the owner know that you’re serious about making an offer is to send them what is called a Letter of Intent (LOI). This not only officially lets them know that you want to buy their practice, but it also ensures that everyone starts on the same page concerning the terms of the deal.
Creating the right LOI can often make the difference between getting a practice or being passed for another offer, but this begs the question, “What all should be included on a Letter of Intent to buy a dental practice?” Below, you’ll find a list of items we have put together that have helped us close deals for hundreds of dentists around the country.
The first thing any owner will look at on your LOI is the offer price. Is it competitive compared to other offers? Our team can help you determine the real value of a practice so that the offer you make will catch the owner’s eye while still being fair to you.
Structure of the Deal
How will payment for the practice be made? What will the size of the down payment be? How many installments, over what period of time, will be involved? This will essentially outline the road to success for you and the buyer so you both know what to expect over the course of the deal.
Proposed Close Date
While the date of the close will almost certainly change, simply putting a realistic one on paper is an essential part of any LOI. Estimating when the close will happen can be quite tricky, but we can help you choose a date that is neither too soon nor too far in the future.
Due Diligence Period
It’s important to let the owner know that once they accept the offer in your LOI, you’re going to really dig into the nitty-gritty of the practice in order to perform due diligence. Getting information about the accounts receivables, active patient base, insurance, and more takes time, and an owner won’t simply twiddle their thumbs indeterminately while you do your research. Setting boundaries when it comes to due diligence will put their mind at ease and make your offer more appealing.
Outline of General Lease Terms
Before you fully own the practice, you’ll likely want to lease it from the owner so you can start making money with the property ASAP. Going over the lease terms will answer any questions about this transition upfront.
Similar to buying a house, earnest money is an amount you pay to the owner when they initially accept your offer to show that you are serious about purchasing. It can only be reimbursed at the owner’s discretion. If you decide to back out of the deal after your offer has been accepted, you will not get this money back. Our team can help you choose the right amount so that it is appealing to the owner, but it won’t affect your overall ability to pay at the same time.
The Right Team Makes It Easy
After we help you find the ideal location and choose the right practice, Next Level Consultants can also help you put together your LOI. The letter itself will not only look extremely professional, but it will also outline terms that help you stand out among other buyers. Basically, we’ll design it so that the path forward is as smooth as possible for both you and the owner.
Buying a dental practice doesn’t have to be stressful! With Next Level Consultants on your side, we’ll ensure you have peace of mind throughout this process while getting the most out of your money. To learn more about how we can help you reach the next exciting phase of your career, contact us today.