Sample Letter of Intent to Purchase or Sale of Physician Practice

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LETTER OF INTENT TO

PURCHASE or SALE OF PHYSICIAN PRACTICE

WARNING and WORDS OF ADVICE – Before you decide to Buy or Sell a Physician Practice, you should do some due diligence.  Make sure you have put together a strong team to follow through on this transaction. Make sure you have run background checks on the parties involved. Make sure you have checked their key employees on the Medicare Exclusions List.  Make sure you have done a public records check for prior and pending lawsuits filed against them.  Make sure that you are not owed some big money or bonus from any of the health plans.  Key is to make sure that the numbers and disclosures are done properly, and double check your management services agreements, your health plan agreements, lease agreements, and any other agreement where the practice is obligated to give the right of first refusal (ROFR) to another person or entity.  You will need an attorney, who not only has the legal background, but also a strong financial background, and has the experience to guide you. Contact www.MirzaHealthLaw.com, Call or Text 954-445-5503 - Ben Assad Mirza, Attorney, former Certified Public Accountant (CPA) and former Certified in Healthcare Compliance (CHC), and has a Masters of Law in Taxation with concentration in Mergers & Acquisitions.

Here is a sample Due Diligence List to Purchase a Physician Practice Acquisition and a sample letter of intent to purchase or sell a  physician practice in a Word Format

Physician LOI - Letter of Intent to Purchase or Sell Physician Practice
Letter of Intent to sell or buy a physician practice by a larger group.

RE: Purchase of a Physician Practice Business Assets

This Business Purchase Letter of Intent (the “Letter” of “LOI”) sets forth the proposed terms and conditions of the Purchase described hereunder and shall govern the relationship between the Buyer and Seller (the “Parties”) until replaced by a definitive, formal agreement addressing the same purchase and subject matter (the “Definitive XXXASSET PURCHASEXXX Agreement”). This Letter also supersedes and replaces any and all prior letter of intent between the parties. The purchase considered in this Letter and in the Definitive Agreement is subject in all respects to the following:

  1. THE BUYER. XXXBIGTIMEBUSINESSPRACTICEXXX, LLC (the “Buyer”), with main office located at XXX111 SLATERUNRD, READING, PA,11111XXX
  1. THE SELLER. XXXDRJOHNSMITHXXX, (the “Seller”), with main office located at XXX999 OCEANDRIVE, MIAMI, FL 33333XXX
  1. THE BUSINESS. XXXDRJOHNSMITHXXX MD, P.A. (the “Business”).
  1. THE PURCHASE. Unless otherwise agreed to by the Parties, the Buyer agrees to pay the Seller the amount of XXX$3,500,000XXX (the “Purchase Price”) in exchange for all assets of the Business (the “Purchase”). The Buyer shall provide a current copy of its bank account balance or a current line of credit equaling the amount of the Purchase Price, prior to the execution of the LOI.
  1. Assets of the Business shall include all furniture, fixtures, computers, equipment, software, and assignment of all revenue and employee contracts. Other than real estate leases, there will be no other obligation or loan outstanding that will transfer from the Seller to the Buyer.
  1. REAL ESTATE. Unless otherwise agreed to by the Parties, the Purchase will:

Assignment of Lease Estate. The Seller agrees to include in the XXXAssignmentXXX of the real  estate lease for property located at:

  • XXX101 W INTEGRITY DRIVE, Suite 111 Fort Lauderdale, FL 33011XXX

Sale of Real Estate. There is NO sale of Real estate included in the Purchase.

  1. PAYMENTS.Payments shall be made as follows:
    1. Upon Entering of Letter of Intent (LOI). The initial nonrefundable deposit of XXX$100,000XXX must be paid toward the Purchase Price within 3 days of execution of this LOI. If no such deposit is made, the Seller shall no longer be obligated to sell. Date of Closing is anticipated to be within XXX60XXX days of entering into this Letter of Intent.
    2. Upon Closing. The payment of XXX$2,800,000XXX must be paid toward the Purchase Price must be paid at the time of closing the Purchase, unless otherwise agreed by the Parties, by executing a definitive purchase sale agreement, bill of sale, and a non-interest bearing promissory note.
    3. Owner Financing. The Seller shall enter into a XXXPROMISSORY NOTEXXX finance the final payment of XXX$600,000XXX of the Purchase Price to be paid by Buyer under the following terms:
      1. XXX$300,000XXX, within 12 months of closing,
      2. XXX$300,000XXX within 24 months of closing.

The Seller shall have the right to file a UCC Lien, along the right charge interest at the annual interest rate of 18% for all amounts outstanding, and the right to foreclose/seek final judgment on said lien.

      1. Other. [OTHER PAYMENT INSTRUCTIONS - NONE].
  1. BANK ACCOUNTS/FINANCIAL ACCRUALS. The Seller would agree to leave immediately prior to closing XXX$50,000XXX in the Business's financial accounts to maintain the accounts operational for the Buyer. Seller shall be entitled to all receipts of money, bonuses, incentives, and savings, earned for services rendered prior to Closing, even if received after the Closing. Similarly, Seller shall leave in account all advance payments received for future services to be rendered after the Closing Date.  Similarly, all expenses whether incurred or prepaid shall also be trued up to reflect the working capital adjustments as of the Closing Date. 
  1. SELLER'S EMPLOYMENT. Seller is a licensed professional and is expected to be employed by the Buyer for a period of two (2) years, at an annual salary of XXX$300,000XXX for working approximate 40 hours per week, of which no more than 32 hours of the week shall be dedicated to seeing patients. The remaining 8 flexible hours shall be dedicated to administrative/follow-up day and shall generally be completed on Friday, at the Employee's discretion. The Employee shall have a Continuing Medical Education allowance of XXX$5,000XXX and XXX5XXX paid CME days, and paid time off (PTO) of XXX20XXX vacation days and XXX10XXX sick days. The Seller shall enter into a formal PROFESSIONAL EMPLOYMENT AGREEMENT, and shall be entitled to receive payroll disbursements and other benefits of similarly employed professionals by the Buyer.

SPECIAL CONDITIONS OF EMPLOYMENT:  During the period of employment, the Seller shall be allowed to keep certain employee at its discretion, including XXXJOANPAXXX and XXXJOSEPHARNPXXX.

  1. DUE DILIGENCE. The Buyer has had an opportunity to review the preliminary financial statements of the Business. Those financial statements are deemed to be materially accurate. Buyer shall provide, or attempt to provide, a full list of any additional documents needed to conduct its due diligence within XXX5XXX days of this letter. Seller agrees to provide, or attempt to provide, the requested documents within XXX14XXX days of the request.  The Seller agrees to make all the reasonably necessary books and records available to Buyer, provided the necessary non-disclosure agreement and patient health information is protected from disclosure. The Buyer and their advisors shall have full access to the Business's information, and they will be held to a fiduciary duty of confidentiality and must not misappropriate or disclose the information to any third (3rd) parties without the Seller's authorization.
  1. TRANSITION OF SERVICES. The Business shall be deemed to be in a state of transition, for the time period that the Seller is employed by the Buyer. The Employer shall use the name of the Business through the date of Seller's employment and no further thereafter. The Parties also agree to enter into a XXXTRANSITION SERVICES AGREEMENTXXX as part of this transaction so that the Business may continue its operations.    
  1. TERMINATION. In the event the Due Diligence results in the financial disclosures being materially misstated or inaccurate, then Buyer shall have the right to terminate this LOI with a 3 day XXXNotice of TerminationXXX and cease the processing of this transaction any further. Alternatively, if the Closing is not completed within the anticipated Closing Date, Seller and/or Business has the right to terminate this Letter for cause with a 3 day Notice of Termination. In either event either event, post termination, Parties shall continue to comply with the terms of confidentiality and follow the Federal and State rules and regulation for protecting patient health information. Notice of Termination may be delivered XXXeither returnrecieptcertified or via emailXXX.
  1. RETURN OF MATERIALS. The Buyer shall return to the Seller any information or materials concerning the Business if a Closing is not completed within the timeframe specified.
  1. CONDITIONS. The Buyer shall be obligated to perform the following, upon which they shall decide whether to proceed with the Purchase:
  • Review materials relating to the Business;
  • Perform their due diligence to their reasonable satisfaction;
  • Either Party (both Buyer and Seller) may communicate with employees, vendors, or other third (3rd) parties as necessary, but not with patients or XXXMANAGEMENTSERVICESORGANIZATIONXXX or with Sellers health plans.
  1. CONFIDENTIALITY. The Parties shall maintain the negotiations and pertinent information confidential and limited only to the Parties' advisors, internal staff, or other necessary third (3rd) parties, including specifically management service organizations and health plans. Press or public releases are prohibited without prior mutual written authorization from the Parties or as required by law.
  1. GOOD FAITH NEGOTIATIONS. The Parties are expected to negotiate the terms of the Purchase herein in good faith.
  1. EXCLUSIVE OPPORTUNITY. The Parties shall refrain from entering into negotiations or discussions concerning the Business with any other party unless another agreement (e.g., option to purchase, first right of refusal, etc.) is already in place.
  1. STANDSTILL AGREEMENT. The Seller is prohibited from selling any portion of the Business to a third (3rd) party unless the Purchase is not completed within the timeframe indicated.
  1. INTENTION OF THE PARTIES. This Letter sets forth the intentions of the Parties to use reasonable efforts to negotiate, in good faith, a Definitive Agreement with respect to all matters herein. Even if this Letter is terminated, Parties agree to be legally bound by paragraphs 11 through 22, post termination of this Letter. Any legal obligations with respect to all other matters shall only arise if and when the Parties execute and deliver a Definitive Agreement.
  1. HEALTHCARE COMPLIANCE. Each party shall comply with all laws, rules and regulations that may be applicable to its respective activities and responsibilities under this Agreement. The parties enter into this Letter with the intent of conducting their relationship in full compliance with applicable laws, including, but not limited to, the Medicare and Medicaid Anti-Kickback Statute and the federal Stark Laws. Neither party nor their affiliates will intentionally conduct itself under the terms of this Agreement in a manner as to constitute a violation of the Anti-Kickback Statute, the Stark Law or any other applicable laws. The Purchase Price to be paid by Buyer to Seller for the purchase of the Assets hereunder has been determined through good faith and arms-length bargaining and consistent with the fair market value opinion provided by an independent valuation expert. No amount paid by Buyer to Seller hereunder is intended to be a payment for referrals or other business and nothing contained in this Agreement shall require (directly or indirectly, explicitly or implicitly) any party or its affiliates to refer or direct any patients or other business to the other party or its affiliates. The parties shall carry out this Agreement in accordance with the provisions of the Health Insurance Portability and Accountability Act of 1996, the HITECH Act, and associated regulations promulgated respectively thereunder (collectively, “HIPAA”) and will work together cooperatively to ensure that any use and disclosure of protected health information related to the transactions contemplated herein is in accordance with HIPAA and other applicable law.
  1. GOVERNING LAW. This Letter shall be governed under the laws of the State of Florida. Should a dispute arise under this Letter of Intent, both parties agree to hold the other party harmless, and waive their right to sue; except for issues relating to the protection of patient health information and other confidential information. Prevailing party shall be entitled to reimbursement of all reasonable legal fees and costs incurred.
  1. SEVERABILITY. This Letter shall remain in effect in the event a section or provision is unenforceable or invalid. All remaining sections and provisions shall be deemed legally binding unless a court rules that any such provision or section is invalid or unenforceable, thus, limiting the effect of another provision or section. In such case, the affected provision or section shall be enforced as so limited.

SIGNATURES.

Business Signature: ___________________________ Date: _____________

Print Name and Title: XXXDRJOHNSMITHXXX, as partner on behalf of XXXDRJOHNSMITHXXX,P.A.

Seller's Signature: ___________________________ Date: _____________

Print Name: XXXDRJOHNSMITHXXX, personally.

Buyer's Signature: ___________________________ Date: _____________

Print Name and Title: XXXROBERTTHEBUYERXXX, Chief Executive Officer

Buyer Entity:  XXXBI

Buyer's Signature: ___________________________ Date: _____________

Print Name and Title: XXXROBERTTHEBUYERXXX, Chief Executive Officer

Buyer Entity:  XXXBI

Here is a video seminar on How Mergers and Acquisitions are Done in Healthcare.

If you just wish to get some legal input and are not ready to retain an attorney, you may consider making a 1 hour appointment  to discuss the specifics of your situation, for a prepaid legal fee of $475 legal, click here

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