Overview
Driven by regulatory initiatives, market dynamics, and ongoing structural changes, growth and consolidation have shaped the U.S. health care landscape for more than a decade. All sectors of the health care market are experiencing varying degrees of investment and consolidation, with many large superregional and national investment platforms being established. However, significant private equity interest in the behavioral health sector has only emerged in recent years.
Due to the diverse range of services and delivery models in behavioral health, there was limited effort before 2019 to build the kind of investment platforms that had become common in medical specialties such as eye care and dermatology. The national changes brought about by the COVID-19 pandemic heightened the demand for behavioral health services, reduced stigma, and popularized new delivery models.
The scope of care in this sector is remarkably broad, encompassing mental health, addiction and autism treatment, developmental disability care, and inpatient psychiatry. As of Fall 2022, several addiction and autism treatment platforms were in operation, whereas fewer platforms focused on mental health and counseling services. Overall, more than 40 private equity-backed platforms have been established to drive investment and consolidate operations.
Private equity firms seek to create value through revenue growth and cost efficiencies achieved by scaling operations, expanding services, enhancing operational performance, and negotiating improved reimbursement rates with commercial payors. In July and August of 2022 alone, 14 different transactions were completed in the behavioral health space, two of which were facilitated by Physician Growth Partners. Most recently in January 2025, PGP advised GBCC Behavioral Health and Oasis Behavioral Health Urgent Care in their partnership with Orchard Mental Health Group, a portfolio company of Graham Group.
Business owners in this sector are well-positioned to capitalize on this heightened activity, either by forming a new platform with a private equity partner or securing an attractive partnership with a strategic acquirer.
Our team has successfully guided several behavioral health practices through the private equity process. There are several steps that we take to ensure successful outcomes for our clients, these include:
- Develop the appropriate financial modeling to position maximized cash flow and “credit” for ongoing initiatives that are driving growth
- Determine the right mix of potential buyers (including both strategic acquirers and private equity groups) and implement a strategy to reach them
- Managing buyer marketing, bid solicitation, and negotiation
- Position the client to meet relevant potential buyers with strong offers that address cultural fit, strategy, and alignment
- Manage the transaction process to maximize leverage with potential buyers
- Negotiate key economic and structural deal terms, leveraging PGP experience within the behavioral health specialties
- Facilitate all due-diligence pre-closing to ensure a seamless process that does not take away from the day-to-day business while ensuring the highest probability for a successful close
- Maximize financial results for shareholders while maintaining clinical autonomy
