Ownership and transitions
Letter of intent
A document that outlines the main terms of a proposed practice sale before the final contracts, with some parts binding and some not, depending on its wording.
A letter of intent, often called an LOI, records the main terms two sides expect in a deal. In a practice sale it may cover price range, timing and a period for due diligence. The SBA lists a letter of intent first among the typical steps in buying an existing business, ahead of the confidentiality agreement and the sales agreement.
Whether an LOI binds the parties depends on its wording. Some parts, such as confidentiality, may bind while others may not.
Buyers and sellers should have an attorney read the document before signing. A letter of intent usually comes before a final contract in a practice acquisition. This entry is general information.