Behavioral Health M&A Down 21% in Q4 2019

There was a steep slowdown in mergers and acquisitions during the fourth quarter of 2019, according to new data from Irving Levin Associates.

During the quarter there were 15 publicly announced transactions, down 21% from the 19 transactions in Q3 2019 and down 46% from a year earlier.

“This sector has seen years of growth as private equity firms have piled in to build national and regional platforms around addiction treatment and autism programs and services,” Lisa E. Phillips — editor of The Health Care M&A Report, which publishes the data — said in a statement. “It’s not surprising to see more contraction after several years of growth.”

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Recent reporting from Behavioral Health Business shows that most in the industry expect more deals in the autism space specifically, but the slowdown isn’t a total surprise.

“A lot of the buyers that were active in the market purchased at the peak of the market [and] are trying to digest some of the initial transactions,” Kevin Taggart, Managing Partner at Mertz Taggert, told BHB. “Some of them might be struggling a bit themselves and trying to get their house in order before they continue [buying].”

He added that some buyers have recently become slightly more discerning with deals they are considering, but long term, he sees plenty of reason for optimism.

“The need [for these services] isn’t going away and I do think in the second half of the year it will pick back up again for well-run treatment centers,” Taggert said.

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