Senior Care Letter of Intent: Terms to Resolve

Start with the definitions of letter of intent and proof of funds if those terms are new. Sellers comparing bids can use the buyer-type comparison to organize the evidence behind each offer, then return here for the detailed terms review.

Identify what the proposed offer covers

Start with the parties, legal entities, locations and services. State whether the buyer proposes to purchase assets, shares or another interest. Identify any separate property owner. If the buyer will form a new entity, explain who stands behind the offer and which details still need to be settled.

List what is included and excluded. Cash, receivables, debt, resident deposits, equipment and contracts should not disappear inside a phrase such as the whole business. A seller may plan to keep the building while the buyer assumes it is included. Make that difference visible before either side spends more on diligence.

The asset-versus-stock guide helps organize questions about scope. SBA purchase guidance also identifies records, contracts and professional advice as parts of a business purchase. Neither supplies the legal document for the deal in front of you. (Source: SBA purchase guidance.)

Review binding status before negotiating from a headline

Ask counsel which duties start at signature and which terms remain proposals. Confidentiality, exclusivity, expenses, access, publicity and dispute provisions need careful review. Do not assume that a nonbinding title cancels more specific language in the document or another agreement already signed.

Read the LOI alongside the NDA and any earlier offer or deposit agreement. Identify conflicts, cross-references and terms that survive when discussions end. The parties should know which document controls each issue. Counsel should explain the effect of their wording and conduct under the applicable law.

Avoid treating an informal email as a harmless way to change a material term. Record changes through the agreed process and have the right people approve them. This guide identifies issues for review; it does not determine enforceability or provide wording to sign without legal advice.

Separate the price from its payment components

State the price basis and what can change it. A fixed amount, an earnings formula and a maximum contingent price mean different things. Then identify cash at closing, seller financing, escrow, rollover interests and any payments that depend on future events. Do not describe them all as money immediately available to the seller.

For a platform proposal, identify the issuer and class of any retained investment before treating that component as settled. The private equity seller guide follows payout priority, dilution and departure terms through the documents that define the seller’s rights.

The following fictional agency offer excludes real estate and all closing adjustments. It shows a maximum price, not an actual offer or recommended structure. Debt payoff, expenses and taxes are excluded. Escrow is part of funded cash and is withheld from that cash at closing.

The maximum is $800,000 + $200,000 + $100,000 = $1,100,000. Immediate cash is $800,000 − $50,000 = $750,000. The note and contingent payment do not add cash to the buyer's operating account. The example assumes neither future collection nor escrow release and does not model note interest.

Have advisers examine payment definitions, security, senior-lender conditions and claims against escrow. If a payment depends on later performance, define the measure, records and decision rights. Commercial incentives must not override required care or the judgment of the qualified operating team.

Use the earn-out measurement review before accepting a contingent-price formula. Its fictional example corrects the eligible days before applying the cap. The resulting payment still needs separate review of lawful incentives, authority and collection risk.

State the earnings assumptions behind price

Identify the period, entity and earnings measure used in the discussion. Seller's discretionary earnings, EBITDA, EBITDAR and property net operating income are different measures. The earnings definitions guide explains the costs each one leaves inside or outside the calculation.

State how the proposal treats owner work, rent, temporary labor and required spending. An annualized recent month is not a completed year. If the price assumes more occupied units or a new payer contract, identify that assumption and what evidence is still missing.

Keep a buyer's planned savings separate from the seller's demonstrated results. A proposal can be tested during diligence, but the parties should know which facts could change it. Avoid an unexplained pricing formula whose inputs will be chosen later by only one side.

Make working capital and receivables explicit

Record the intended approach even when the final figures need more work. If normal working capital is included in price, identify the categories to be measured and the accounting rules to be agreed. A working-capital peg is a negotiated comparison point, not automatically the buyer's operating cash reserve.

If the seller keeps old receivables, explain how the buyer will fund payroll while new receipts develop. If balances transfer, distinguish face amount from supported collectible value. Decide how later credits, refunds and receipts are assigned. Resident funds, advance payments and unpaid wages may need separate treatment.

Consider a simple disagreement: the seller expects to keep every invoice issued before closing, while the buyer expects those balances to fund the next payroll. The headline price can appear agreed even though the cash plan is not. Resolve the treatment and update both the deal terms and the funding schedule.

Build a funding condition around the whole project

A lender conversation, a preliminary indication, credit approval and funds available to close are different stages. Identify the proposed loan, buyer contribution and any other sources. Include transaction costs, deposits, required property work and operating liquidity, as well as the price.

The whole-project purchase budget follows the price through a paid deposit, deferred seller consideration and remaining cash sources. Its invented stress case shows why a balanced initial plan can develop a gap. Use that reconciliation when defining the proposed funding milestone.

The proof-of-funds date exercise follows a fictional transfer counted in two account balances from different days. It shows the error in the combined cash claim. Use it to frame a request for consistent evidence at the funding milestone, without assuming the whole purchase is funded.

Ask the lender how seller financing, receivable terms, property arrangements and approval timing affect the proposal. A note the seller accepts may still conflict with the lender's conditions. Do not quietly fill a funding gap with a source that has not been assessed or committed.

Have counsel explain the agreed consequences if financing fails or takes longer. Review application milestones, records the seller must supply, deadlines and expense obligations. The parties need the actual document's process, not an informal promise that everyone will be flexible.

Tie the closing plan to verified authority

List the state, federal, payer, landlord and other permissions that may affect the proposed change. Assign counsel to assess each one against the actual service and structure. The detailed work may differ for home care, home health, hospice or a campus with several care settings.

For covered providers, 42 CFR 489.18 addresses Medicare ownership and agreement assignment, including retained conditions. The HHA and hospice majority-ownership provisions in 42 CFR 424.550 need a separate review. Neither issue is settled by the asset or stock label on the offer. (Sources: 42 CFR 489.18; 42 CFR 424.550.)

As checked September 6, 2026, CMS's May 13 HHA/hospice moratorium covers initial applications, including non-exempt changes in majority ownership. The initial term is six months and may be extended. Counsel must assess the actual provider history and pathway; buying an existing business is not a general exemption. (Source: CMS enrollment moratoria.)

Track what each step proves. An application receipt does not establish approval or its effective date. If an expected decision changes, revisit financing, exclusivity and transition assumptions together. An interim management proposal also needs its own legal and payer review before use.

The licensing and financing condition exercise compares a future authorization with an earlier loan expiry. Moving the planned handoff does not extend the lender commitment. Recheck both documents before relying on the revised date.

Set access rules and milestones that show progress

Use a practical diligence request list with a responsible coordinator. Define the financial, operating, property and specialist work needed. Agree how questions will be answered, which people may review sensitive records and who can authorize visits or interviews. Keep required notices ahead of preferred secrecy.

HHS's minimum-necessary guidance has scope limits and exceptions; it is not unlimited permission to disclose. Have the privacy adviser determine the lawful path for the specific records and purpose. An LOI or NDA does not by itself permit unrestricted access to patient or staff files. (Source: HHS minimum necessary.)

Exclusivity needs clear scope, start, end and extension terms. Have counsel address permitted activity and the process if progress stalls. The table is an organizing tool, not a legal deadline or an automatic right to end exclusivity. Document revised expectations when the evidence changes.

Two fictional exercises connect the calendar with different evidence tasks. The diligence-timeline FAQ separates package delivery from a later review question. The closing-delay FAQ updates a payoff for a moved funding date. Use them to identify what needs review when the agreed schedule changes.

The seller-training cost and task review helps turn a support promise into defined work. It checks included hours, agreed rework treatment and a successor test before treating either the invoice or handoff as complete.

Define the seller handoff and the next review

List the seller tasks that the buyer expects to receive. Scheduling, billing, landlord contacts and suitable introductions may need different training. Specify the buyer-side successor, time, cost and completion evidence. A broad promise to help does not establish qualified leadership or continuing operating authority.

At the definitive-document stage, use the purchase-agreement review guide to follow the agreed terms across schedules, property documents and handoff records. A changed buyer entity or excluded asset can affect more than the main agreement. Keep the operating model and required decisions aligned with the final scope.

Discuss tax allocation before the final terms are fixed. IRS Form 8594 instructions address applicable asset acquisitions and relevant later changes in consideration. Have the CPAs and counsel assess the actual assets and terms. An allocation label cannot create permission to use a license. (Source: IRS Form 8594 instructions, November 2021 revision.)

Before signing, compare the draft with the issue list: scope, price, cash, earnings, approvals, access, deposits, binding duties and deadlines. State what remains unresolved and who owns the next action. The broker can organize the commercial discussion; the legal, tax, lending and operating conclusions remain with the appropriate advisers.

The APA document overview explains how to organize the later purchase agreement, its schedules and transfer documents. Use it to distinguish document collection from evidence that closing conditions have been completed.

The assisted-living license timeline question connects an open approval with the commercial schedule. Its fictional milestone table helps the parties identify which missing evidence must be resolved before relying on a handoff date.

The seller-financed purchase example helps test whether a proposed payment schedule states the full principal obligation. Carry the final maturity amount and any unresolved lender restrictions into the terms discussion before treating the note as available funding.