Lee Equity, FFL Partners Reportedly Exploring Sale of Summit BHC

The behavioral health and substance use disorder (SUD) treatment provider Summit BHC is reportedly up for auction.

The private equity firms Lee Equity Partners and FFL Partners — which own controlling stakes in the Franklin, Tennessee-based company — are currently searching for a buyer, sources told PE Hub in a story published Thursday.

Global investment banks Jefferies and Moelis & Company (NYSE: MC) are said to be providing advice on the sale, the publication reported, saying the process was initiated about three weeks ago.

Lee Equity and FFL own equal stakes in Summit BHC, after partnering to acquire the provider in 2017.

Sources told PE Hub that various factors make Summit BHC attractive to a prospective buyer. For example, the provider has a seasoned leadership team and an in-network commercial business paybook of nearly 100%. Additionally, the pandemic has fueled a rise in demand for behavioral health services.

Sources also cited Summit BHC’s service platform as an attractive factor for a potential suitor.

“One [strength], sources said, is the fact that Summit has built a multi-market platform in behavioral health, which means it has more avenues for growth, including through M&A and organic avenues,” the PE Hub article said.

Summit BHC operates 24 facilities across 16 states — and the company is growing.  Most recently, the behavioral health provider purchased The Pavilion and The Farley Center in January. Both behavioral health facilities are located in Williamsburg, Virginia.

Meanwhile, when and if Summit BHC changes hands, maturity-adjusted EBITDA is projected to be in the high $80 million to low $90 million range for 2021, some sources told PE Hub. Additionally, they said they expect current run-rate EBITDA to come in the mid-$70 million area.

Summit BHC’s current CEO is Brett Turner, who assumed his position last September. Turner is the former president of Acadia Healthcare (Nasdaq: ACHC) and is credited with having played a significant role in the behavioral health care giant’s expansion from six to almost 600 facilities.

If the sale of Summit BHC goes through, it will likely help contribute to a record year for M&A activity in the behavioral health space.

The first half of 2021 has seen 57 behavioral transactions, according to the M&A consulting firm Mertz Taggart. If M&A activity continues at a similar pace for the remainder of the year, it will be the highest number of behavioral health transactions ever recorded, breaking last year’s record total of 107.