Is a letter of intent legally binding?

Mostly not, by design. It records the terms both sides expect while lawyers draft the purchase agreement. The clauses meant to bind are the ones that must hold if the deal fails: confidentiality, exclusivity, who pays costs, and the return of documents. Say in the letter which paragraphs bind and which do not, and have a lawyer who knows your state read it before anyone signs.

What does a NEMT letter of intent need that a general one leaves out?

Conditions for each approval the seller cannot hand over: every broker contract, the Medicaid enrollment or ownership filing, and any license. It also needs a list of vans with their liens, a decision on receivables for rides run before closing, the phone numbers and online accounts that riders and brokers use, and a rule for sharing rider information during diligence.

What should the price section cover?

The total, how it is paid (cash at closing, a seller note, money held in escrow), and how it is divided among assets. For an asset purchase, buyer and seller each report the sale on IRS Form 8594, which sorts assets into seven classes, with vehicles and equipment in Class V and goodwill in Class VII. Agree the split before closing, because it changes both tax bills.

What if a broker will not approve the new owner?

The letter should already say. Because section 5 makes each approval a condition, the buyer may waive it or walk away, and the seller keeps the company. Add a line on whether either side may extend the deadline for the approval, and whether any escrow or deposit comes back. WellTrans's Indiana agreement, for example, lets WellTrans withhold consent to an assignment in its sole discretion.

Can the seller keep the phone number and web accounts?

Only if the letter leaves them out. Riders, facilities, and brokers call the number, so list each phone number, the website address, and the online accounts that carry the company name as included assets. A number moves by a port request to the buyer's carrier, and for a simple port the FCC rules give the old carrier one business day (47 CFR 52.35).

How long should exclusivity run?

Match it to the diligence period in the letter and add a date when either side may walk away. Broker and state approvals can take longer than diligence, so write how the period can be extended in writing and what the seller may do if an approval has not arrived by then.

Letter of Intent to Buy a NEMT Business (Template)

How to use this letter

The buyer writes it and the seller signs it, usually after the buyer has read the seller’s numbers and asked each broker how it treats a new owner. Keep it to two or three pages. Replace every bracket, delete any line that does not apply, and have a lawyer who handles health care deals and your accountant read it before you send it. It is a fill-in document, not legal advice.

The letter sets the shape of the deal. It does not repeat what a buyer checks or files, which buying an existing NEMT company covers, and it does not set the price, which NEMT business valuation works through. The seller’s side is in selling your NEMT company.

The letter

[Buyer letterhead]

[Date]

[Seller owner names and title], [Seller company legal name], [address]

Re: Proposed purchase of [Seller company], a [NEMT / non-emergency medical transportation] company operating from [city, state]

Dear [name],

This letter sets out the terms on which [Buyer legal name] (“Buyer”) proposes to buy [Seller company legal name] (“the Company”). Except for section 9, it is a statement of intent and creates no obligation to complete the purchase.

1. Structure. Buyer will buy [all of the assets of the Company, listed in section 3 / all of the membership interests or shares of the Company].

2. Price. The price is $[total], paid as $[cash at closing] in cash, $[amount] by a note from Buyer to Seller over [number] months at [rate] percent, and $[amount] held in escrow for [number] months to cover claims the Company’s earlier operations cause. [Asset purchase only: Buyer and Seller will agree before closing how the price is divided among vans and equipment, [licenses and permits], [a non-compete from the Seller], and goodwill, and each will report it the same way on IRS Form 8594.]

3. What is included. [Asset purchase: the vans listed in Schedule A with clean titles, lifts and equipment, the Company’s name, the phone numbers [list], the website address and online accounts [list], the facility and rider contact lists the law and each payer allow, driver and vehicle records, and the vehicle lettering.] Excluded: cash, [receivables for rides run before closing], [other].

4. Liens and debts. Seller will deliver each van free of liens, paying lenders from the proceeds at closing. Seller remains responsible for debts, taxes, and payer overpayments from before closing, except [list].

5. Payers, enrollment, and licenses. Buyer’s obligation to close depends on: (a) written confirmation from [broker or payer names] that each will contract with Buyer, or consent to assign its agreement, on terms Buyer accepts; (b) approval of Buyer’s Medicaid enrollment or of the ownership change in [state]; (c) transfer or issue of [license, permit, or certificate]; and (d) written consent or a new agreement from [facility names]. Seller will help Buyer apply for each, and Buyer may waive any of them in writing.

6. Due diligence. For [number] days after both sides sign, Seller will give Buyer [financial statements for two years, trip counts by payer and level of service, payer and facility agreements, audit and overpayment letters, vehicle titles and service records, driver files, insurance loss runs, exclusion-list search results]. Rider health information will be shared only as the law and each payer’s contract allow, starting with counts and totals.

7. Financing. Buyer’s obligation [does / does not] depend on financing approval by [date].

8. After closing. Seller will stay for [number] months to introduce Buyer to brokers and facilities and to train dispatchers, [paid $__ per month / unpaid]. Seller will not [run or work for a competing NEMT company within [area] for [number] years] or [solicit the Company’s drivers, riders, or facilities for [number] years], to the extent the law of [state] allows.

9. Binding terms. This section binds both sides when they sign. (a) Each side keeps the other’s information confidential for [number] years and returns documents if the deal ends. (b) For [number] days, Seller will not negotiate with or accept an offer from anyone else for the Company or its assets. (c) Each side pays its own costs. (d) [State] law governs.

10. Timeline. Diligence ends [date]. Buyer’s lawyer sends a draft purchase agreement by [date]. Target closing is [date]. This letter expires if it is not signed by [date].

Sincerely, [Buyer name, title, phone, email]

Accepted: [Seller name, title, date]

Which terms bind, and which do not

Bind only what has to survive a failed deal. Confidentiality, exclusivity, costs, return of documents, and the governing law do that, so they sit in section 9. The price, the escrow, and the closing date stay non-binding until the purchase agreement is signed, because each depends on what diligence turns up.

Put one sentence at the top that says which sections bind. It stops a later argument over a number that was only an estimate. Rider information needs its own line in the confidentiality clause, because the seller may not be allowed to hand it over. MTM’s 2023 provider agreement keeps information about its members confidential and bars disclosing it to any person or business without MTM’s written consent, except for the provider’s own internal use to do the work.

Payers, enrollment, and licenses are conditions, not assumptions

Section 5 is the one that makes the letter a NEMT letter. The vans and drivers move by bill of sale. The right to be paid does not, and each payer decides for itself how it treats a sale. How the main rules work, from the 35-day federal disclosure to broker consent and new enrollments by state, is laid out in what a change of ownership is and in the guide to buying an existing NEMT company. The letter only has to name each approval and make closing depend on it. Settle receivables in section 3 as well: Medicaid payment may go only to the provider that furnished the service (42 CFR 447.10(d)), so in an asset deal the seller’s company is usually the one paid for rides run before closing.

List each broker’s written answer in section 5, and read each agreement’s own assignment clause. WellTrans’s Indiana agreement bars assignment without its written consent, which it may withhold in its sole discretion, and MTM’s 2023 provider agreement requires MTM’s written consent to assign any part of it. Some state enrollment forms ask for the sale documents themselves. Indiana’s module asks a new owner for a copy of the purchase agreement or bill of sale, so section 10 should set a date for the draft that leaves room for the filings.

Name the people too. Run each owner, manager, and driver through the OIG exclusion list during diligence, and check every driver file against the driver file checklist.

Phone numbers, names, and accounts

List the intangibles in section 3, because a rider calls the number and a broker finds the company by its name. Include each phone number, the website address, the company name and any trade name, and the online accounts that carry the company name, with the login that controls each one.

A phone number moves by a port request to the new carrier, and for a simple port the FCC’s rules give the old carrier one business day (47 CFR 52.35). Ask the seller to sign each carrier’s port authorization at closing, and do not cancel the old line before the port completes.

An example of sections 2 and 5, with invented numbers

This example uses a made-up company and made-up figures. Replace every one.

2. Price. The price is $520,000, paid as $380,000 in cash at closing, $60,000 by a note from Buyer to Seller over 36 months, and $80,000 held in escrow for 12 months.

5. Payers, enrollment, and licenses. Buyer’s obligation to close depends on written confirmation from the two brokers that carry most of the Company’s trips that each will contract with Buyer, and on approval of Buyer’s Medicaid enrollment in [state] before closing.

The escrow is $80,000 of $520,000, so about 15 percent of the price waits a year. A seller who wants less held back can offer a shorter period or a lower amount, and a buyer can ask for more if the Company has open audit letters.

What happens after both sides sign

Calendar the dates. Mark the end of exclusivity, the end of diligence, and the date the letter expires.
Start the approvals the day after signing. Each one needs the seller’s help and an outside office’s answer, so together they set the closing date.
Hand the draft to counsel. The purchase agreement turns the non-binding terms into promises, adds the seller’s statements about its billing and records, and sets the indemnity.
Plan the non-compete with the state’s rule in mind. Minnesota voids most non-competes yet keeps one that is “agreed upon during the sale of a business” (Statutes 181.988), and other states differ. See non-compete agreements for more examples.

Schedule A, the list of vans, and the driver list are easier to build when each vehicle’s and driver’s expiration dates already sit in one place. HealthRide keeps them, sends a reminder ahead of each expiration, and flags a trip about to go to a driver or vehicle whose credential has run out. See fleet.

Letter of intent to buy a NEMT business: price, what is included, and the contracts that may not transfer