When I was buying a home several years ago, it was a true seller’s market, and getting an offer accepted was tough. When I finally got that acceptance, it was because of the same strategy I’m going to tell you about.
Today I want to talk about your Letter of Intent. It comes after you find and analyze a practice. So this isn’t the first step in buying a dental practice, but it is a vital one. When you know you want to buy a particular practice, you’ll then submit an LOI, or Letter of Intent.
What is a Letter of Intent?
An LOI is a written, non-binding document that outlines the proposed terms of a deal. “Non-binding” means that it’s not a legally enforceable document—in other words, the terms can change as you and the seller negotiate.
But just because it’s non-binding, don’t make the mistake of thinking it’s not important. The LOI serves two major purposes, among others: 1) it sets the stage for the rest of the negotiations and transition, and 2) it may convince the seller that you’re the right buyer.
What should I include in my Letter of Intent?
While the LOI is legally non-binding, it still serves to set the tone and the initial terms of the deal. There will be lots of numbers, dates, and arrangements that will be best spelled out by your accountant and your lawyer. Let’s not get bogged down there. So what does that leave for you, the dentist?
Back to my story about buying a home. When I finally got an offer accepted, I spoke briefly later with the sellers, who told me that it wasn’t the offer that convinced them, it was the note I included with it. Financially speaking, my offer was right in line with everyone else—but I included with mine a short letter that told the sellers about me and my family. I told them what I liked about the home, and why I was excited to raise my kids there. In turn, it got the seller excited to pass the home on to someone who they thought would love it as much as they had for the last 20 years.
Your LOI can and should serve that same purpose. You’ll get to the numbers as the Letter goes on, but your opening paragraph might look something like this:
“I’m so excited to be a potential buyer of this amazing business you’ve spent the last 25 years building. I love <positive element #1> and can tell you put a lot of thought into it for your patients. Looking online and talking to people in the area made it clear that <positive element #2> is really important to you, as it is to me. I can’t wait to continue the tradition of <positive element #3> in your office as it is so important in dentistry.”
I’ll put it simply: are you truly excited to buy the practice? Then tell the seller! In fact, you should send copies of the LOI simultaneously to both the seller and the broker so they both know how enthusiastic you are.
Oh, and a final tip: print your letter and then sign it in blue pen. It’s a small thing, but it’s a proven psychological technique to communicate that you put care into your letter, and that you signed it yourself.
The Letter of Intent is a vital part of the process of buying a dental practice. If you want to educate yourself more about what exactly goes into the LOI, I include that—in great detail—in the third module of my online course. Check it out here:
The Practice Purchase Blueprint Online Course
