Tailwinds Propel Active First Quarter of Deals in BH Sector

“Significant tailwinds” propelled an active first quarter of mergers and acquisitions across the behavioral healthcare space, according to a report published on Friday by M&A advisory firm Mertz Taggart.

A total of 29 deals were announced in the opening quarter of 2021, continuing a pattern of roughly 30 deals per quarter that has been established dating back to the start of 2020. The lone exception during this stretch was Q2 of 2020, during which the onset of the COVID-19 pandemic triggered a slowdown in activity.

Mertz Taggart managing partner Kevin Taggart said the Q1 activity was “telling, but not unexpected.”

Private equity accounted for 22 of the 29 deals announced in Q1, including three platform transactions and 19 add-on deals. With a mandate to invest and grow, private equity firms will continue to watch closely as industries get back on their feet post-pandemic. In the meantime, Taggart said in the report that “[w]ith many private equity-backed strategic companies operating in the space continuing to grow, I wouldn’t be surprised to see a public offering, either traditionally or through a special purpose acquisition company (SPAC) in the coming months.”

Within the overall behavioral healthcare sector:

• 11 deals were announced in the area of addiction treatment, down slightly from the 14 reported in Q4 2020, but on par with the prior two quarters
• 9 deals were announced in autism services and intellectual/developmental disabilities, matching Q4 2020
• 10 deals in the mental health sector were announced, down from 15 in Q4 2020, but still up significantly from the second and third quarters of last year

The full Mertz Taggart Behavioral Health M&A Report for Q1 2021 is available on the firm’s website.