Insights

M&A In The Behavioral Healthcare Services Market

July 14, 2023

Behavioral healthcare services M&A has been on the rise in recent years due to the high demand for mental and behavioral health services in the US. The behavioral healthcare market saw a 45% increase in 2022 versus the prior year and remains a fast market in early 2023.

Outpatient behavioral healthcare services have become increasingly popular due to their accessibility and cost-effectiveness. As more patients seek treatment for mental and behavioral health issues, the demand for outpatient services grows. Investors are particularly interested in outpatient services that offer comprehensive care, including individual and group therapy, medication management, and community-based support services.

In addition to private equity firms, strategic buyers such as healthcare systems and payers also show interest in the behavioral healthcare services market. These players want to diversify their revenue streams and expand their offerings to meet the growing mental and behavioral health services demand.

Recent federal funding and investments to expand coverage and access to critical services have also increased M&A activity in the behavioral healthcare services sector. In March 2022, the US House of Representatives passed a $1.5 trillion spending package that included financial support programs to expand mental healthcare. The package granted $2.14 billion in funding to the National Institute for Mental Health (NIMH) to bolster research on the impact of the pandemic on mental health, an increase of $37 million from 2021.

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At the state and local levels, the package allocated $857 million to the Mental Health Block Grant to address mental healthcare gaps. This also requires states to spend at least 5% of their block grant funds on mental health services.

The behavioral healthcare services sector has experienced a surge in M&A activity due to the high demand for mental and behavioral health services in the US. As the demand for cognitive and behavioral health services continues to grow, particularly in the outpatient care segment, we expect strong and continued behavioral healthcare services sector M&A growth for the foreseeable.

Author
Gonzalo Martinez-Aunon
Deal Analyst
Benchmark International

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Africa: Anthony McCardle at +27 21 300 2055 / [email protected]

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Benchmark International is a global M&A firm that provides business owners with creative, value-maximizing solutions for growing and exiting their businesses. Benchmark International has handled over $10 billion in transaction value across various industries from offices across the world. With decades of M&A experience, Benchmark International’s transaction teams have assisted business owners with achieving their objectives and ensuring the continued growth of their businesses. The firm has also been named the Investment Banking Firm of the Year by The M&A Advisor and the Global M&A Network as well as the #1 Sell-side Exclusive M&A Advisor in the World by Pitchbook’s Global League Tables.

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