Letters of Intent in Dental Practice Sales and Acquisitions - Are They Worth The Paper They're Written On?
Jordan Uditsky • March 19, 2021
The road to hell is paved with good intentions, as they say. So too is the expressway that leads to failed business transactions, including the acquisition and sale of dental practices. Purchasers and sellers may agree in principle to the broad outlines – or even specific details - of a practice acquisition, and often put the terms of such tentative agreement into a document called a “letter of intent.” But if negotiations then go south, and one party wants out of the putative deal, can the other party enforce such a document?
Also sometimes called a memorandum of understanding or term sheet, a letter of intent is a strange legal animal. It isn’t exactly a contract, but a judge and Illinois law may treat a letter of intent as an enforceable agreement if the parties intended to be bound by it and it contains the material terms of the proposed transaction. Other times, a letter of intent may be held to be simply an “agreement to agree” sometime in the future rather than a legally binding and enforceable contract.
If you are in the early stages of a potential dental practice asset or equity purchase or sale and seem to be on the same page with your counterpart, here is what you need to know about any proposed letter of intent.
Intent to Be Bound
It may sound like circular logic, but determining whether a letter of intent will be enforced like a contract depends on determining the intent of the letter. As the Illinois Supreme Court
put it, “although letters of intent may be enforceable, such letters are not necessarily enforceable unless the parties intend them to be contractually binding.”
A judge will decide whether the parties intended the letter to be a binding contract by examining the language of the letter, as well as the circumstances surrounding its negotiation, preparation, and execution.
That is why parties entering into a letter of intent for the purchase of a dental practice should clearly spell out whether they intend for the document to create enforceable obligations. By including clear and concise language that states explicitly whether the letter is to be treated as a binding contract or merely an “agreement to agree,” the parties can spare themselves the time, costs, and risk of having a judge make that decision for them.
That is why it is generally best that a letter of intent contains certain provisions that are explicitly non-binding (though allowing for further negotiation) and certain provisions that are binding and enforceable regardless of the outcome of the proposed deal, such as confidentiality and the removal of the practice from the market during the negotiations.
Material Terms Must Be Included
Even if the purchaser and seller expressly intend for their letter of intent to be binding and enforceable, an Illinois court will not enforce any such letter unless it contains all material terms of the deal. After all, it is hard to enforce the parties’ obligations when the parties themselves have not identified those obligations.
For dental practice sales and acquisitions, the parties to a letter of intent should include essential and material terms such as:
- The purchase price.
- Whether the purchase is of the practice’s equity or assets.
- The assets to be purchased and those to be excluded.
- The treatment of accounts receivable (AR), including whether the practice’s AR is part of the purchase and whether any discounts will be applied.
- Who is responsible for existing debt, liability, and patient credits.
- The terms of any non-compete or non-solicitation agreements to be part of the transaction.
- Any existing lease agreements and whether the sale of the practice is contingent upon successful assignment or execution of a new lease for the office space.
- Terms for patient retreatments, including who is responsible for retreating patients and how much the purchaser will earn if they perform the work.
- The access the prospective purchaser will have to the practice’s books to conduct financial and clinical due diligence.
- An exclusivity provision stating that the selling dentist agrees to cease all conversations and negotiations with other potential buyers.
- Any employment arrangements with the selling dentist or their staff.
- An expiration date for the letter of intent.
If you are considering buying or selling a dental practice in Illinois, a letter of intent can be a useful tool during negotiations. But if not carefully and precisely drafted to reflect both parties' mutual intentions, it may not accomplish either party’s goals.
We Focus on You So You Can Focus on Your Patients
At Grogan Hesse & Uditsky, P.C., we focus a substantial part of our practice on providing exceptional legal services for dentists and dental practices, as well as orthodontists, periodontists, endodontists, pediatric dentists, and oral surgeons. We bring unique insights and deep commitment to protecting the interests of dental professionals and their practices and welcome the opportunity to work with you.
Please call us at (630) 833-5533 or contact us
online to arrange for your free initial consultation.
Jordan Uditsky, an accomplished businessman and seasoned attorney, combines his experience as a legal counselor and successful entrepreneur to advise dentists and other business owners in the Chicago area. Jordan grew up in a dental family, with his father, grandfather, and sister each owning their own dental practices. This blend of legal, business, and personal experience provides Jordan with unique insight into his clients’ needs, concerns, and goals.
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By the same token, don’t assume it is a bogus threat; crumble up the letter and throw it in the recycling. Deadlines in these letters are real, and failing to respond appropriately to a viable claim could lead to litigation. · Contact Your Attorney Immediately. This is not a DIY situation. Before responding to the letter or contacting the sender, consult with an attorney experienced in ADA compliance and website accessibility issues. Your lawyer can evaluate the demand letter or complaint, the validity of the claim, and the law firm behind it before formulating an appropriate response. Testers send many cookie-cutter letters that may contain boilerplate allegations of deficiencies that do not actually exist. · Evaluate Your Actual Compliance. Work with your attorney and website accessibility experts to have your website assessed against the Web Content Accessibility Guidelines (WCAG) , which courts often reference in ADA website cases. Understanding your site's actual accessibility helps inform whether settlement, remediation, or another approach makes sense and whether you need to take additional steps to avoid future claims. Keep in mind that this isn't just about legal compliance—it's good business. An accessible website serves all patients better and demonstrates your commitment to inclusivity. If you have questions about your business's ADA obligations and how to protect it from accessibility complaints, please call Grogan, Hesse & Uditsky at (630) 833-5533 or contact us online to arrange for your free initial consultation. At Grogan Hesse & Uditsky, P.C., we focus a substantial part of our practice on providing exceptional legal services for dentists and dental practices, as well as orthodontists, periodontists, endodontists, pediatric dentists, and oral surgeons. We bring unique insights and deep commitment to protecting the interests of dental professionals and their practices and welcome the opportunity to work with you. Jordan Uditsky, an accomplished businessman and seasoned attorney, combines his experience as a legal counselor and successful entrepreneur to advise dentists and other business owners in the Chicago area. Jordan grew up in a dental family, with his father, grandfather, and sister each owning their own dental practices. This blend of legal, business, and personal experience provides Jordan with unique insight into his clients’ needs, concerns, and goals.
Why TODAY Is The Time To Prepare Your Practice – and Yourself - For an Uncertain Tomorrow
Bogus ADA Claims Regarding Dental Practice Websites Are Rampant. Your Lawyer Can Help You Tell the Difference Between a Real Problem and a Real Shakedown. Over 25 years have passed since the Americans with Disabilities Act (ADA) quite literally reshaped the landscape for people with disabilities. From building entrances to parking lots to restrooms to elevators, from hiring and employment opportunities to restaurants, stores, and websites, disabled Americans have far greater access to the same facilities, services, and opportunities as everyone else. Harassment at Best, Extortion at Worst For all the good it has accomplished, however, the ADA has also been abused by opportunistic individuals and attorneys who have used the law in bad faith to shake down small businesses, including dental practices, for alleged violations that have not actually caused any harm or infringed upon any rights afforded by the act. These self-appointed ADA compliance "testers" have filed thousands of nuisance ADA suits that have cost American businesses millions of dollars. According to one analysis, ADA lawsuits have increased by 320% since 2013, with over 4,000 suits filed in 2024 alone. Many plaintiff's law firms file hundreds of cookie-cutter ADA lawsuits each year. One person can visit multiple businesses or websites in a single day solely to identify even the slightest accessibility transgressions in order to generate claims. While these suits can focus on any number of alleged ADA shortcomings, those relating to website accessibility (discussed in detail in this earlier post ) filed by a handful of law firms and serial plaintiffs have earned the scorn of small businesses and practices across the country. That's because these "testers" and the lawyers who represent them specifically target small businesses, as they typically have limited means to defend themselves, may not be able to discern between legitimate and bogus claims, and often see a quick payoff as the path of least resistance. Here’s how the shakedown typically goes down: A plaintiff or their attorney sends the practice a demand letter in which they claim that the practice’s website is inaccessible to people with disabilities (e.g., missing image alt text, inaccessible forms, incompatible with screen readers). They cite a violation of Title III of the ADA. They make a demand for a cash settlement, often ranging from $2,500 to $25,000, alongside a request for accessibility fixes. The business/practice cuts a check in exchange for a release of any ADA claims by that plaintiff related to the website. The business/practice may then receive more demand letters, often from the same firm, on behalf of other plaintiffs who make the same claim, and the extortion continues. Don’t Act Impulsively – Do This Instead All this is not to say that dental practice owners should consider all such claims and demands to be frivolous or ignore their ADA obligations relating to their website. To be sure, a meritorious ADA lawsuit can indeed expose a practice to significant financial and reputational damage. Before reflexively giving in to an ADA demand letter and settling a supposed claim, practice owners should take the following steps: · Don't Panic, But Don't Ignore It. As noted, a demand letter with legalese and ominous language doesn’t mean that you’ve done anything wrong or actually violated the law. While your immediate reaction may include fear, confusion, or anger, don’t act impulsively. By the same token, don’t assume it is a bogus threat; crumble up the letter and throw it in the recycling. Deadlines in these letters are real, and failing to respond appropriately to a viable claim could lead to litigation. · Contact Your Attorney Immediately. This is not a DIY situation. Before responding to the letter or contacting the sender, consult with an attorney experienced in ADA compliance and website accessibility issues. Your lawyer can evaluate the demand letter or complaint, the validity of the claim, and the law firm behind it before formulating an appropriate response. Testers send many cookie-cutter letters that may contain boilerplate allegations of deficiencies that do not actually exist. · Evaluate Your Actual Compliance. Work with your attorney and website accessibility experts to have your website assessed against the Web Content Accessibility Guidelines (WCAG) , which courts often reference in ADA website cases. Understanding your site's actual accessibility helps inform whether settlement, remediation, or another approach makes sense and whether you need to take additional steps to avoid future claims. Keep in mind that this isn't just about legal compliance—it's good business. An accessible website serves all patients better and demonstrates your commitment to inclusivity. If you have questions about your business's ADA obligations and how to protect it from accessibility complaints, please call Grogan, Hesse & Uditsky at (630) 833-5533 or contact us online to arrange for your free initial consultation. At Grogan Hesse & Uditsky, P.C., we focus a substantial part of our practice on providing exceptional legal services for dentists and dental practices, as well as orthodontists, periodontists, endodontists, pediatric dentists, and oral surgeons. We bring unique insights and deep commitment to protecting the interests of dental professionals and their practices and welcome the opportunity to work with you. Jordan Uditsky, an accomplished businessman and seasoned attorney, combines his experience as a legal counselor and successful entrepreneur to advise dentists and other business owners in the Chicago area. Jordan grew up in a dental family, with his father, grandfather, and sister each owning their own dental practices. This blend of legal, business, and personal experience provides Jordan with unique insight into his clients’ needs, concerns, and goals.
