Behavioral Health M&A

An intellectual or developmental disability (I/DD), autism diagnosis, or any other mental health condition can severely impact both the life of the one diagnosed and those caring for them and require a lifetime of treatment. Our nation has seen an increased focus on treating such conditions, along with rising insurance reimbursements, and, for that reason, behavioral health M&A has shown steady growth over the past several years. From a business perspective, buyers are drawn to the typically longer tenure of the average mental health patient versus the geriatric-focused businesses.

The need for mental health treatment was highlighted during the pandemic. Specific industries seeing the greatest increase in M&A activity have been Substance Use Disorders (SUD), Applied Behavioral Analysis (ABA), I/DD, and Mental Health. 2021 brought a 34% increase from 2020 in behavioral health transactions, creating back-to-back record years for the industry. This type of demand affords a seller the opportunity to consider multiple options, from selling outright to pulling in a partner to generate a “second bite of the apple.”

Many of our hospice and home healthcare partners want to add behavioral health to their footprint. Healthcare sellers who qualify as a platform for a buyer entering that market can achieve significantly accelerated multiples on EBITDA.