In today’s Transition Talk, we talked about one of the first steps in transitioning – the letter of intent! There are many ways to put this document together. It can be an email with bullets, it can be a simple word document, a broker provided template or it can be a legalese letter drafted by an attorney full of terms and language.
In our world, the dental practice letter of intent should detail out the material terms of a transition and act as a skeleton for the formal definitive documents (which we will discuss in Ep 11 and 12!). This document is where you agree on the items that *should* be the items that will make or break a negotiation. The more complete and understood that this document is the better.
Some of the top terms to include in your Letter of Intent (in no particular order) :
- Price!
- Tax Allocation (either specifics or guidelines)
- Identification of type of sale (Asset or Stock/Interest)
- Closing Date
- Contingencies to Closing
- Re treatment Clause
- Non-Compete & Non Solicit Terms
- Seller Work Back (How long and how much?)
- Accounts Receivable and Credit Handling
- Prepaid and Work in Progress Patients
- Building Sale and/or Lease Terms
- Patient & Referral Notification
Remember, if one of the above didn’t make it into your letter of intent, that is okay! Each transition and negotiation is unique and those items not detailed will be discussed and agreed upon, just in the formal docs.
Also one final note on a letter of intent – it is the framework of your legal docs and a good faith agreement by both parties to move forward and negotiate the legal docs based upon the agreed upon terms. As a buyer, don’t feel pressured to sign something, and as a Seller, don’t feel obligated to accept something unless you agree with those terms. Its often hard for both parties to go back on what was thought as “previously agreed”.
NDP works with our clients before, during and after the letter of intent process and we would love to help you – have questions on the Letter of Intent? Due Diligence? Next steps with your buyer or seller? Let us help you in your transition journey….Contact us for a complimentary call about your specific situation!
