The letter of intent is the shortest document in the transaction and the one that decides the most. Two or three pages, usually drafted by the seller’s broker, often signed the same week it arrives. I’m rarely asked to look at one beforehand. The call comes in week four, once the buyer has worked out what he agreed to.
So what is a letter of intent? A written summary of the deal you think you’re making — price, structure, timeline, conditions — most of it expressly non-binding. But a few clauses bind immediately, and those are the ones the seller’s side drafted carefully.
The asymmetry runs in one direction. Clauses protecting the seller take effect on signature. Those protecting you are aspirations until the purchase agreement arrives — by which point your leverage is spent, along with several thousand dollars of your own money.
Nobody says the quiet part: an LOI has you paying cash for a promise the other side can walk away from.
Which Parts Actually Bind You:
Most of a letter of intent to purchase a business is non-binding by design, and a well-drafted one says so explicitly. Price can move, structure can change, either party can walk.
A few provisions typically bind from the moment of signature:
- Exclusivity, or the no-shop clause
- Confidentiality
- Who pays which expenses
- Governing law and dispute resolution
Read those four slowly. If a clause you care about sits outside that list, it isn’t protection — it’s a note about what you both hope happens.
Exclusivity Is What You’re Actually Paying With:
Exclusivity is the seller agreeing not to talk to other buyers for a set period. It’s the only real consideration flowing to you, and it’s worth exactly as long as it lasts. The failure mode is exclusivity with no end date, or one that renews automatically. It freezes the seller and gives you no deadline, which sounds like it favors you. It doesn’t. A trapped seller turns difficult, and a deal without a clock drifts until someone quits. Tie exclusivity to your diligence window — thirty to sixty days is common on a single-location practice. Need more? Ask up front, not later from weakness.
Thirty Days Is Not a Diligence Period:
This is where unrepresented buyers hurt themselves most. They accept a thirty-day due diligence period because it sounds decisive, then find the work doesn’t fit.
What Has to Fit Inside It:
A realistic window absorbs:
- Three years of returns, production by provider, payroll
- Lease review and, if assignment is needed, landlord consent
- Building, equipment, state facility and radiology requirements
- Lender underwriting, including appraisal and environmental work
That last item breaks schedules. SBA-backed financing moves on the lender’s calendar, and the appraisal and environmental report alone run weeks, ordered from third parties who’ve never heard of your closing date. Sixty to ninety days is the honest ask.
The Financing Contingency Most Buyers Get Wrong:
“Subject to buyer obtaining financing” protects almost nobody. On what terms? At what rate? By when?
A contingency worth having names the loan amount, a rate ceiling you can service, the term, and a date. Without those, an approval at terms you can’t live with may still satisfy the condition, and your deposit becomes an argument instead of a refund.
Worth an hour of your attorney’s time before you sign, not after.
Settle Structure Now, Not in the Purchase Agreement:
Two items belong in the letter, not the purchase agreement.
Structure — asset or stock purchase — changes your tax basis and liability exposure, and it’s priced. Leave it open and you renegotiate later.
Allocation across equipment, goodwill, and intangibles decides what you deduct and how fast. Buyer and seller report identical figures on IRS Form 8594, and their interests are opposite. Agree on the framework now.
Earnest money, transition length, non-compete scope, and working capital are negotiable too — covered in what experienced buyers do differently on price.
The Sixty Days After You Sign:
While you review, the seller’s team is watching your financing, fielding quiet interest from other buyers, and measuring whether you’re moving. Deals collapse here for ordinary reasons: diligence turns up something material, the appraisal comes in low, exclusivity lapses, the buyer goes quiet. Silence reads as doubt, and a seller who doubts you starts taking calls. Send an update weekly even when there’s nothing to report. Plan on five to eight months from signed LOI to closing for a solo buyer, most of it lender underwriting. Landlord consent, license timelines, and surprises in the financials stretch it further.
Frequently Asked Questions:
Q1. Can I walk away after signing an LOI?
Generally yes, on non-binding terms. The binding clauses survive.
Q2. Is my deposit at risk?
Depends entirely on how the contingencies are written. Read them before you fund.
Q3. The seller’s broker drafted it. Is that a problem?
Not dishonest, but whoever drafts sets the defaults. Expect the binding clauses to favor their client.
Q4. Should an attorney review the LOI?
Yes. Cheapest legal hour in the transaction.
Final Thoughts:
The letter of intent is where buying a veterinary practice stops being a search and becomes a deal. Get exclusivity, the diligence window, the financing language, and structure right in these two pages and the rest of the veterinary practice transition gets easier.
Skilled buyer representation earns its fee here more visibly than anywhere else. However you get there, read the four binding clauses before you sign the pages of hope around them.
