The need for behavioral health services is at an all-time high – and private equity investors have taken note.
In the first three quarters of 2022, private equity deals made up more than 60% of behavioral health transactions, according to data from The Braff Group. Many investors see the fragmented behavioral health industry as a prime target for consolidation and growth, reports Behavioral Health Business.
And despite global economic headwinds, behavioral health deals are still at a premium. In fact, behavioral health transactions in the first 11 months of 2022 were valued at $3.3 billion, according to a recent report from PricewaterhouseCoopers (PwC).
Yet no one private equity group has the majority market share of any space. That’s likely because PE firms tend to diversify their investments and avoid competing portfolio companies.
“There’s a lot of private equity firms that are focused on health care services, so then they might have a couple of behavioral businesses that are in a completely different geographies, or one is completely outpatient and one is completely residential …. where it’s not directly competing,” said Vasanta Pundarika, co-head of health care investment banking at capital market group Matrix. “But then you can only have three or four of those before you start to have a lot of overlap.” Read more.
