A letter of intent (LOI) can make a dental practice deal feel settled before the hard questions have been answered. The document may be short, but its terms can shape the purchase agreement, the due diligence process, and each party's expectations. For an Ontario dentist, the useful question is: What needs agreement now, and what still needs investigation?
Start with the transaction you are actually proposing
Is the buyer acquiring assets or shares? The answer changes the agreements and diligence required. Identify the intended purchaser and seller, the practice location, the assets or shares in scope, and the proposed price and payment structure. Address whether cash, accounts receivable, equipment, supplies, goodwill, and assumed obligations are included, excluded, or still to be negotiated.
A headline price alone leaves room for very different assumptions. If the number depends on financing, an allocation, working capital, or an adjustment at closing, say so before either side spends heavily on the next stage.
Define the path from offer to closing
Set a workable timetable for diligence, preparation of the definitive agreement, and closing. The buyer may need to review financial statements, equipment, material contracts, staffing, privacy practices, regulatory matters, and the premises. List any material conditions, including financing, professional advice, satisfactory diligence, and lease arrangements. Avoid a deadline that assumes a landlord or lender will act on the buyer's preferred schedule.
A deposit also deserves precise treatment: who holds it, when it is payable, whether it bears interest, and exactly when it is refundable or released. A vague reference to a “refundable deposit” does not answer what happens if a condition is not satisfied or a party walks away.
Treat the lease as an early deal issue
A practice buyer usually needs reliable access to the clinic premises after closing. Ask for the lease and every amendment early. Check the remaining term, renewal options, rent increases, permitted use, assignment or change-of-control wording, and any landlord security requirement. The transaction structure and lease terms together determine whether consent or a new lease is needed. Our lease guide walks through the practical review.
Separate binding commitments from open negotiations
Many LOIs are intended to leave the purchase itself subject to a formal agreement, yet particular promises, such as confidentiality, exclusivity, access to information, costs, or governing law, may be intended to take effect immediately. State clearly which provisions are binding, when they begin and end, and what happens if a definitive agreement is never signed. A label such as “non-binding” should not be expected to resolve contradictory wording elsewhere in the document.
Confidentiality is especially important when a purchaser will assess sensitive practice information. The RCDSO guidance on changes of practice ownership explains that a potential purchaser assessing practice operations must first enter into a confidentiality agreement before receiving personal health information under the applicable framework. Plan information access and safeguards with counsel rather than placing patient files into an ordinary data room.
Think beyond the closing date
Will the seller stay for a transition? Will there be a separate associate arrangement, restrictive covenants, or a handover of key staff relationships? Who coordinates patient communications and the custody of records? These points affect value and continuity of care. They also deserve a realistic timetable rather than a last-minute promise to “cooperate.”
Questions to answer before signing
- Which terms bind us now, and which depend on the final purchase agreement?
- What exactly is being sold, and how might the price change?
- What diligence can the buyer conduct, and how is confidential information protected?
- Can the premises be secured on acceptable terms before closing?
- What happens to the deposit if a condition fails?
- Who handles patient notice, records, staff, and any seller transition?
An LOI works best when it creates a clear route to a more detailed agreement without pretending that diligence has already happened. Have the proposed document reviewed against the actual practice and lease before signing. For the broader sale process, see our Ontario dental practice seller guide. Discuss your transaction with Dentist Legal.
This article is general information, not legal advice for a particular situation. Contact us to discuss your matter.
← All articles