Whether you’re buying or selling a dental practice, one of the most important initial documents is an Offer to Purchase (OTP). This signed document lays out the price, terms, transition, and real estate (if applicable) of a practice being sold. Recently, we’ve seen buyers increasingly use a Letter of Intent (LOI) to make the offer, especially when the buyer is a corporation or a DSO. When an individual dentist is the buyer, however, a simple, one-page offer form is often all that is needed to agree to the basic terms of the deal and move forward. A broker is prepared and can easily create a personalized OTP document for you.
One page is more than sufficient to lay out the basics of the deal, including:
Buyer’s name & address
Seller’s name & address
Assets being purchased
Assets not being purchased
Terms of payment
Real estate (if applicable)
Anticipated settlement date
At this stage, regardless of the document that is used, from a simple offer form or a formal Letter of Intent (LOI), it is non-binding. The specific details will be worked out in the Asset Purchase Agreement (APA) by attorneys for both parties. The sooner the offer form is agreed to and signed, the sooner the buyer can secure financing, begin the credentialing process, give notice to an employer if necessary, and allow the attorneys to begin working on the APA and other contracts.
A formal LOI often goes into more detail than is necessary in the early stages of a dental transaction. Also, it often involves the attorneys at an earlier point in the process, which can slow it down and lead to unnecessary costs for both parties.
If you have any questions about how to structure an OTP, your ADS specialist is ready to help.