Crafting a thorough Letter of Intent (LOI) is one of the most crucial steps you can take when planning the sale or purchase of an optometry practice. For many optometrists, transitioning ownership is about far more than a simple handshake agreement—it involves nuances such as real estate, patient loyalty, insurance credentialing, and a practice’s underlying goodwill.

At Dental & Medical Counsel, we’ve seen firsthand how a carefully composed LOI can streamline negotiations, reduce confusion, and ultimately pave the way for a more successful closing. Learn more about the key sections, tips, and best practices for drafting an LOI that protects the interests of both buyer and seller.

Why an LOI Matters in Optometry Practice Transitions

In the realm of optometry, the specific nuances of the profession lend themselves to a unique transaction environment. Unlike many small businesses, an optometry practice relies heavily on patient relationships, consistent recall appointments, and specialized equipment. Whether you’re a seasoned optometrist looking to retire or a young doctor aspiring to break into the market, an LOI can be the difference between a smooth transaction and a deal fraught with pitfalls.

An LOI serves as a preliminary agreement, outlining the key points of the deal without fully binding either party to the final terms. This structure allows both sides to confirm that they are aligned on major aspects—such as purchase price, timing, and any post-sale obligations—before committing to a formal purchase agreement. By compelling each party to detail expectations up front, an LOI helps minimize future disagreements and ensures that the subsequent due diligence and closing phases run more efficiently.

Common Misconceptions About LOIs

1. They Are Always Non-Binding: While the main terms (e.g., purchase price) in an LOI are often considered “non-binding,” certain sections (such as confidentiality and exclusivity) can carry binding legal weight. It is critical to understand which segments of your LOI are enforceable and which are simply guiding points for further negotiation.
2. An LOI Equals a Final Deal: LOIs are not a substitute for a comprehensive purchase agreement. Rather, they function as an essential negotiating tool, clarifying broad outlines before legal documents are drawn up.
3. LOIs Eliminate All Risk: Even with a detailed LOI, unforeseen issues can crop up during due diligence. The LOI will, however, help you avoid or address the most common conflicts, thanks to its focus on transparency and early alignment.

Pre-LOI Considerations

Before you draft or sign an LOI, you should keep in mind a few preparatory steps. A little planning can go a long way toward preventing misunderstandings, and it can also help you tackle negotiations from a position of knowledge and strength.

First, gather all relevant financial documents. This includes Profit & Loss (P&L) statements, balance sheets, and evidence of production or collections for at least the past three years. While some aspects of the practice—like intangible goodwill—may be a bit trickier to quantify, having a well-documented record of earnings and expenses forms the basis for any credible valuation.

Second, consider your personal and professional goals. If you’re a seller, do you want to retire immediately, or do you plan to stay on as an associate for a few years? As a buyer, how soon do you want full operational control? Laying out your vision before signing an LOI helps clarify your “must-haves” and the concessions you are willing to make.

Lastly, do a preliminary dive into the market environment. Look at other local optometry practices, consider population demographics, and reflect on patient retention rates. Understanding these elements can help you approach purchase-price negotiations and transition plans more effectively.

Assembling Your Advisors

Even if you believe you have a solid understanding of the business side of optometry, assembling a trusted advisory team is paramount. This group might include:

• An Attorney Specializing in Healthcare Transactions: Your optometry lawyer will ensure compliance with state-level laws for optometry, as well as handle the nuances of confidentiality clauses, non-compete provisions, and more.
• An Accountant or CPA Familiar With Practice Valuation: A skilled accountant can validate the numbers behind the proposed deal and highlight areas of concern in the financial statements.
• Consultants with Optometry Expertise: From verifying the condition of specialized equipment to benchmarking staff salaries, a consultant focused on healthcare can provide insights you might not otherwise have.

By involving experts early on, you not only mitigate risks but also put yourself in the best position to negotiate fair terms.

10 Key Terms Every Optometry Practice LOI Should Address

There are 10 essential elements that your Letter of Intent should cover. Each term builds on the next, ensuring both parties have a clear roadmap from the moment negotiations begin to the day of closing.

1. Purchase Price

One of the most significant aspects of any LOI is the purchase price. Whether you base this on a third-party valuation or a mutually agreed-upon multiple of annual collections, the LOI needs to state either a specific amount or a price range. Optometry practices often involve unique items like brand goodwill, patient record management, or specific diagnostic equipment, all of which may skew a typical valuation.

The LOI can briefly outline how the purchase price was determined—e.g., referencing standard valuation methods, local market comparisons, or intangible assets such as the practice’s community reputation. While the final figure might still be negotiable, having a provisional price offers a baseline that both parties can refine during due diligence.

2. Payment Structure

In addition to the overall price, the LOI should clarify how that figure will be paid. Will there be a lump-sum payment upon closing, or will the seller finance part of the transaction over a set period? Perhaps the buyer intends to secure a third-party loan, or an earn-out component will apply if revenue targets are met post-closing.

If seller financing is part of the agreement, specify the interest rate, repayment schedule, and what happens in the event of default. Similarly, if any portion of the transaction is contingent on future performance, outline how metrics will be tracked and who conducts the oversight.

3. Allocation of Assets

In many optometry transactions, the deal is structured as an “asset purchase,” where the buyer acquires specific assets of the business but not the seller’s stock or corporate entity. This can impact tax obligations, liability assumptions, and future management of intangible assets.

Optometry practices may include specialized equipment like optical coherence tomography (OCT) scanners, autorefractors, and lens edgers. The LOI should detail exactly which items are included, their approximate value, and whether intangible assets like patient records or goodwill are part of the deal. Tax implications can vary significantly depending on how these assets are allocated.

4. Non-Compete and Restrictive Covenants

Geographical boundaries and durations for non-compete provisions can be especially critical in optometry, where patient loyalty and routine checkups form the lifeblood of the practice. If a seller opens a competing practice down the street, it can severely undermine the buyer’s post-closing revenue.

Ensure that the distance (in miles) and time length (in years) align with local laws. Also, define whether the non-compete pertains only to optometry services or includes other vision-related businesses, such as optical retail.

5. Transition Period and Employment Agreements

Many sellers prefer a gradual exit, either to train staff on new systems or introduce the buyer to patients for continuity of care. The LOI should clarify if the seller will remain as an associate, whether part-time or full-time, and for how many months or years.

Specify a timeline for how patient relationships will be transferred. Outline any obligations the seller has for marketing or introduction letters to patients and vendor partners. The more explicit these duties, the smoother the transition.

6. Financing Contingencies

If the buyer’s ability to close is contingent on securing financing, detail that in the LOI. Include a reasonable timeframe within which the buyer must obtain a loan commitment.

Should the buyer place an earnest deposit in escrow, clarify under what conditions it might be forfeited or refunded. This ensures both parties know the stakes if financing falls through.

7. Real Estate or Lease Terms

If the practice operates in a freestanding building owned by the seller, the LOI needs to define whether the building is included in the transaction. Alternatively, if the seller is leasing the premises, the buyer and landlord must address the assignment or negotiation of a new lease.

In optometry, location can heavily influence patient flow. If the practice is renting space, include basic rent and renewal details in the LOI, ensuring the buyer is comfortable with these obligations for the foreseeable future.

8. Confidentiality and Non-Disclosure

Even though LOIs are typically non-binding for most deal terms, confidentiality clauses can be binding. Patient records, vendor contracts, employment contracts, and staff information must remain protected.

Patient communities often rely on their optometrist for care continuity. Leaked news of a practice sale can cause uncertainty among patients, so the LOI should require both parties to keep negotiations confidential until they are ready for a formal announcement.

9. Accounts Receivable and Liabilities

Optometry insurance reimbursements sometimes arrive weeks or months after services are rendered. Clearly define whether the buyer will collect on prior accounts receivable or if that money belongs to the seller.

The LOI should note if the buyer is taking over any liabilities—such as equipment leases or pending vendor bills—or whether the seller remains responsible. This prevents confusion about obligations that arose before the official transaction date.

10. Closing Timeline and Due Diligence

An LOI should propose a due diligence period, often ranging from 30 to 60 days. During this time, the buyer can verify financials, inspect equipment, and evaluate patient flow metrics. The LOI can also outline a target closing date, providing both parties with a roadmap.

List what documents or audits the buyer plans to complete—anything from verifying credentialing with vision insurance plans to reviewing staff contracts. This transparency helps the seller prepare information in advance and avoids last-minute surprises.

Negotiating These Key Terms: Best Practices

Once these terms are laid out in a draft LOI, there is almost always some back-and-forth negotiation. The goal isn’t to “win” every point but rather to arrive at an agreement that both sides deem fair and workable.

1. Prioritize Your Must-Haves: If post-sale employment is non-negotiable for the seller, consider concessions in other areas like the transition timeline or equipment allocation. Conversely, a buyer who needs immediate full control might offer a slightly higher purchase price to encourage a quicker exit.
   
   
2. Keep Communication Clear and Respectful: Since optometry transactions often hinge on goodwill—both literal and figurative—maintaining a courteous tone benefits everyone. An adversarial approach can quickly sour a deal and even damage the seller’s willingness to help post-closing.
   
   
3. Document All Changes: Whenever a point shifts during negotiations, update the LOI draft. Clarity at this stage saves time (and legal fees) later.
   
   

Involving Professional Advisors

Qualified attorneys, accountants, and brokers do more than just point out potential red flags. They can also help structure a deal that maximizes tax benefits, ensures regulatory compliance, and sets the stage for a healthy buyer-seller relationship. Their knowledge of local market conditions and past transactions can bolster negotiation tactics and create a fair playing field for all parties.

Avoiding Common Pitfalls

• Overpricing the Practice: The easiest way to derail a transaction is to set an unrealistic price, causing buyer skepticism and multiple rounds of painful negotiation.
• Ignoring Lease Transferability: If a landlord refuses to grant a new lease or has restrictive clauses, the buyer faces an uncertain future.
• Underestimating Culture Fit: If the staff or practice culture is drastically different from the buyer’s approach, patient retention can suffer post-sale.
• Skipping Equipment Assessments: Outdated or poorly maintained equipment can reduce practice value significantly once discovered.

Contact Dental & Medical Counsel for Help With Your Optometry Letter of Intent

The sale or purchase of an optometry practice can be complex. Yet, by crafting a comprehensive Letter of Intent that covers essential terms like purchase price, payment structure, non-competes, and transition timelines, you establish a firm foundation for a smooth closing.

Every transaction involves its own unique set of nuances; that’s why involving knowledgeable parties early—like the team here at Dental & Medical Counsel—can save you headaches and protect the value you’ve worked so hard to build. Contact us today for help with your optometry letter of intent.

Frequently Asked Questions

Q: What is a Letter of Intent (LOI) in an optometry practice sale?
A: An LOI is a preliminary agreement that outlines the key terms of the transaction between a buyer and a seller. It helps align expectations on purchase price, transition details, financing, and other critical factors before drafting a formal purchase agreement.

Q: Is an LOI legally binding?
A: Generally, the main terms of an LOI—such as purchase price and deal structure—are non-binding. However, some sections, like confidentiality and exclusivity clauses, may carry legal weight and be enforceable.

Q: Why is an LOI important in an optometry practice transition?
A: An LOI sets the foundation for a smooth transaction by clarifying expectations early. It helps reduce misunderstandings, streamlines negotiations, and ensures both parties are on the same page before committing to a full contract.

Q: Does signing an LOI mean the deal is final?
A: No, an LOI is not a substitute for a formal purchase agreement. It simply outlines the major terms so that both parties can move forward with due diligence and final negotiations.

Q: What financial documents should be gathered before drafting an LOI?
A: Key documents include Profit & Loss (P&L) statements, balance sheets, tax returns, and proof of revenue for at least the past three years. These provide a solid foundation for valuation and negotiations.

Q: What role does a non-compete clause play in an LOI?
A: A non-compete clause prevents the seller from opening or working at a competing practice within a certain geographic area and time frame after the sale. This helps protect the buyer’s investment in the practice.

Q: How is the purchase price determined in an optometry LOI?
A: The price is typically based on a third-party valuation, a multiple of annual collections, or a negotiated figure that considers goodwill, patient records, and specialized equipment.

Q: What should be included in the transition period section of an LOI?
A: This section should define whether the seller will stay on as an associate, how long the transition will last, and the seller’s role in introducing the new owner to patients and staff.

Q: How does an LOI address lease or real estate considerations?
A: The LOI should specify whether the practice location is included in the sale, if the buyer will assume an existing lease, or if new lease terms need to be negotiated with the landlord.

Q: What happens if the buyer is relying on financing?
A: The LOI should outline financing contingencies, including how long the buyer has to secure funding and what happens if financing falls through. In some cases, an earnest deposit may be required to show commitment.

About the Author

At Dental & Medical Counsel, PC, we understand navigating the legal process can be tricky. We believe every optometrist deserves the best advice and service so optometrists can do what they do best, treat their patients. We make their lives easier by providing expert guidance, so they can focus on their personal and professional aspirations. We are optometry attorneys.

About Ali Oromchian, Esq.

Your Optometry Lawyer

Ali Oromchian, JD, LL.M. is the founding attorney of the Dental & Medical Counsel, PC law firm and is renowned for his expertise in legal matters

In addition to being a optometry lawyer for almost 20 years, Ali is also a renowned speaker, throughout North America, on topics such as practice transitions, employment law, negotiation strategies, estate planning, and more! Ali has helped hundreds of optometrists realize their professional goals and looks forward to aiding you in navigating the legal landscape.