Med spa letter-of-intent checklist: business terms before exclusivity

A med spa letter of intent should make the proposed economics and operating assumptions clear before the parties commit to an exclusive process. Define the earnings base, consideration, included assets, obligations, professional structure, financing, consents, and seller role. Have counsel distinguish binding provisions from proposed terms and identify the conditions still unresolved.

How should this checklist be used before signing?

Use the checklist to identify commercial decisions for the letter of intent and questions for counsel. It is not a contract template or a conclusion that any clause is enforceable. The actual document, facts, and applicable law determine the parties’ rights.

Record the proposed term, assumption, unresolved issue, responsible advisor, and decision. Avoid a document that appears complete because it uses broad phrases such as customary adjustments or standard transition without identifying what those phrases mean for this practice.

Have the buyer and seller compare the same transaction map. Identify the legal parties, management and professional entities, assets, interests, and intended first-day operation. A letter of intent should not let both sides agree to a price while imagining different businesses, staffing, liabilities, or rights that will transfer.

Are price and the earnings base defined?

1. State the valuation basis. Identify the measured period, accounting basis, SDE or adjusted EBITDA definition, supported adjustments, and replacement labor assumptions. Do not compare a multiple until both sides understand its denominator.
2. State the price convention. Clarify whether the figure represents enterprise value, equity value, or another defined amount, and how debt, cash, expenses, and other adjustments affect it. Identify included assets and excluded items rather than assuming the headline covers everything used in the practice.

Keep buyer-specific savings and projected growth separate from historical earnings. If the price depends on a forecast, explain the condition and evidence required. A letter of intent based on an unexplained earnings number can create avoidable disagreement as soon as confirmatory diligence begins.

Is the payment mix and seller outcome understandable?

3. Separate consideration categories. Show closing cash, seller notes, earnouts, escrow, rollover, and other retained exposure. Identify the conditions and proposed timing for each. Compensation for future work should remain separate from purchase consideration.
4. Test a proceeds bridge. Consider an illustrative $2.3 million headline with $1.7 million closing cash, $350,000 note, and $250,000 earnout. If debt is $180,000 and costs $75,000, immediate cash before taxes and other adjustments is $1,445,000. Future amounts do not belong in that immediate-cash total.

The inputs are invented for teaching, not an offer or a valuation. Ask what must happen for each future payment and who controls the outcome. The seller should understand the difference between a maximum possible amount and the money available when closing occurs.

Are working capital and patient commitments addressed?

5. Define working capital and cutoff. Identify the accounts, target method, measurement dates, adjustment process, and dispute mechanism. Avoid a peg that one party assumes includes membership obligations while the other treats them separately.
6. Identify prepayments and refunds. Describe how credits, packages, deposits, gift balances, cancellations, and refunds are handled. State who retains cash and who fulfills services after closing, subject to patient terms and applicable obligations.

The final method needs accountant and counsel review. A letter of intent need not contain every definitive calculation, but it should expose material economic assumptions. Otherwise the same unused balance can be counted twice, ignored, or interpreted differently when the purchase agreement is drafted.

Is the professional and asset structure feasible?

7. Map the lawful operating path. Identify the professional and management entities, owners, licenses, clinical responsibilities, and agreements that need review. The California Medical Board’s corporate-practice guidance illustrates jurisdiction-specific professional-control limits. The actual state and services need their own analysis.
8. Identify transfer and consent issues. List the premises, devices, software, vendor contracts, employment, records, and other assets or responsibilities material to operation. Ask which consents, new agreements, or legal steps are required for the intended buyer.

Do not rely on an MSO label or a general promise to hire a medical director as proof of feasibility. The letter of intent should reflect the options counsel can support before the parties spend substantial time underwriting a structure that cannot operate as assumed.

Are financing and diligence milestones credible?

9. State the funding plan and conditions. Identify equity, proposed debt, seller financing, approvals, and total uses, including costs and operating liquidity. For SBA transactions, the October 2026 SBA SOP 50 10 8.1 updates distinguish categories and requirements; the actual lender should evaluate the proposed structure.
10. Define the diligence process. Specify scope, authorized access, information timing, confidentiality, contact rules, and important review milestones. Give material questions an owner. Do not confuse an initial financing discussion or a populated data room with final approval.

Align the process with realistic dependencies. Provider introductions, landlord consent, valuation, financial review, professional arrangements, and lender authorization can influence timing. A date should be supported by a plan rather than selected only to make the proposal appear more certain than the evidence allows.

Are seller duties, restrictions, and exclusivity clear?

11. Define the seller’s continuing role. Identify proposed clinical, management, training, consulting, or medical-director duties, with compensation, duration, and boundaries. Review any restrictive, retention, or contingent-payment terms with counsel rather than relying on a verbal partnership story.
12. Review binding provisions. Ask counsel to distinguish confidentiality, exclusivity, expenses, access, termination, dispute, and other clauses from proposed purchase terms. Identify milestones, extension conditions, permitted actions, and consequences if the process does not progress.

Exclusivity has economic value because it can limit the seller’s alternatives while diligence continues. The buyer also needs an organized process to justify its investment in review. A workable arrangement makes progress measurable and defines rights without assuming a generic clause is appropriate for every deal.

Which tax and structure questions should not be postponed?

Talk to your CPA and attorney about asset or interest structure, allocation, basis, depreciation, debt, future payments, employment, and any retained interests before the letter of intent narrows flexibility. The IRS business-sale guidance explains that different assets and structures can receive different treatment.

If a term changes, update the connected analysis. A shift from cash to rollover, or from an asset to an equity proposal, can affect more than the headline price. Keep the letter of intent and financial model describing the same transaction.

What should be checked in the final LOI review?

Read the complete document with the transaction map and proceeds model. Confirm the parties understand the same economics, structure, conditions, and duties. Record material open assumptions and who will resolve them. Do not fill gaps with a promise that everything will be handled in customary final documents.

Use the seller hub, buyer roadmap, valuation hub, and operations guide. The diligence guide organizes the review and the offer-to-proceeds bridge clarifies value.

Apply the Continuity Risk Map to the proposed handover. A useful letter of intent gives the definitive work a clear starting point while leaving the parties accurately informed about what remains uncertain, conditional, or subject to qualified advice.

Compare the final letter with the offer worksheet line by line. If a concept has changed during negotiation, update its definition and the related assumptions rather than rely on an earlier email. The parties should know which decisions are settled for drafting purposes, which remain subject to review, and what evidence is needed before a material condition can be treated as resolved.

Educational analysis prepared with AI-assisted research for The Med Spa Broker. “Last reviewed” records the source and editorial check date; it does not imply review by an attorney, clinician, or independent appraiser. Read our editorial standards.