Finding a buyer for your behavioral health company is similar to marriage, except there’s more commitment.

“It’s not like marriage, because in marriage, you can get divorced, and in this, I think, it might be a little messy,” said Sam Himelstein, the co-founder and CEO of Family Spring, a mental health treatment company based in Oakland, California.

Himelstein spoke about overlooked considerations of behavioral health transactions at the Behavioral Health Business INVEST conference in October.

While Himelstein and a partner are building their business with no immediate plans for an exit, contemplating Family Spring’s future is always top of mind, he explained. During the panel, he was joined by Joshua Rosenthal, who sold the company he founded, Manhattan Psychology Group, last year to ARC Health. Kevin Taggart, managing partner at Mertz & Taggart, advised Rosenthal on his sale and was also on the panel. 

Behavioral health dealmaking has cooled since a 2021 peak, but a number of aggressive investors and/or buyers remain. ARC Health, for example, has completed at least 18 transactions since it launched in August 2021, following the Thurston Group’s acquisition of Advanced Recovery Concepts. 

In exploring a company sale, Rosenthal and Himelstein emphasized relationships, saying how you feel about a potential buyer may be more important than the bottom line.

“The money is very alluring,” Rosenthal said. “You might be like, ‘Oh my God, they’re offering the biggest check, right?’ But then that comes with so much baggage that, in the end, it’s not worth it.”

More important, Rosenthal said, are factors like if you enjoy getting dinner with the prospective buyer, or if they treat your management team respectfully.

Getting along with the buyer was particularly important for Rosenthal because he stayed on as CEO of his New York-based company. Rosenthal sold to ARC Health only after speaking to other businesses bought by the Beachwood, Ohio-based company. 

“What meant the most to me was talking to the other CEOs who had sold to ARC Health. And they said, ‘It’s not perfect, but we’re actually really happy that it sold.’ Okay, that is helpful to me,” Rosenthal said. 

Still, Rosenthal described completing the sale as “probably one of the most stressful things I ever did,” full of emotional peaks and valleys.

“I think it’s like doing a psychedelic, right? You can’t explain it to someone unless you do it,” Rosenthal said.

According to Taggart, Manhattan Psychology Group’s sale to ARC Health was actually “relatively quick,” taking 60 days from a letter of interest to the deal’s close.

In hunting for a buyer, Taggart said behavioral health CEOs must “create a competitive process.”

Though it might be “warmer and fuzzier” to engineer a deal where the seller develops a rapport with one buyer, that could mean leaving money on the table.

“It is most likely going to cost you money,” Taggart said.

Taggart said it’s his job to ensure sellers take a long view.

“We do try to find out what’s important to our seller post-closing,” the M&A advisor said. “And a lot of times they don’t know. So, we tell them to keep an open mind.”

Like Rosenthal, Himelstein’s background is in clinical psychology, not building a business. He couched a potential sale in five-year-old Family Springs as improving resources for his patient’s care.

“For me, it’s about building with the exit in mind, because we know that’s going to help kind of develop our standard operating procedures,” Himelstein said.

Himelstein would like a buyer who understands his passion for psychotherapy.

“There does need to be some type of energetic fit,” he said.

Rosenthal said that a year after his company sale, and taking rollover equity in the process, he is content.

“I like to say ARC Health is our parent, and all these other practices [ARC Health also bought] are my siblings now,” Rosenthal said. “I feel supported.”