Behavioral Health Dealmaking Drops to Pre-Pandemic Levels, Latest M&A Data Confirm

Behavioral health deals in Q1 dropped to the lowest level since 2020.

That’s according to a new report by M&A advisory firm Mertz Taggart, which recorded a total of 27 deals in the first quarter of the year. In comparison, the quarterly deal average for 2022 was just over 44 deals.

The Mertz Taggart report attributes the steep deal drop to concerns about a potential increase in capital gains tax, the banking crisis and burnout among industry professionals.


Still, the report notes that the mental health sector is still attractive to buyers, even if deal flow has slowed.

Photo credit: Mertz Taggart

“Although mergers and acquisitions have slowed over the last quarter, activity is still at very high levels. Deals are just taking longer to get completed,” Kevin Taggart, managing partner at Mertz Taggart, said in the report. “The remainder of the year will be stronger than Q1.”

The report noted that Thurston Group’s mental health provider ARC Health acquired several centers, including Wellington Counseling Group, Colorado Center for Clinical Excellence and Lilac Center.


Other notable deals mentioned were GV’s investment in serious mental illness startup firsthand and behavioral health provider Acadia Healthcare’s acquisition of Missouri-based CenterPointe Behavioral Health System.

Although behavioral health deals were down overall, the mental health segment continued to have a healthy deal flow in Q1, with 23 deals. While that’s a dip from the 33 deals in the previous quarter, it still beat all quarters in 2021.

Photo credit: Mertz Taggart

Substance use disorder provider deals dropped significantly in Q1. The report recorded four deals in the segment, a steep drop from the 12 deals in Q4.

“There are fewer buyers and less demand in addiction treatment,” Taggart said. “The buyer landscape has shifted. Many traditional buyers have paused for various reasons, and those who are buying are being very disciplined in their acquisitions.”

The autism and IDD segment is facing similar growing pains. This segment also only had four deals, and this is a slight dip from 2022’s six deals per quarter average.

Taggart attributes the slow deal flow in the space to traditional consolidators actively exploring more de novo strategies instead of M&A.

Companies featured in this article: