Have I got a rehab for you… –
January 31, 2020 – “We’re still getting a lot of calls from people who are struggling for one reason or another. It seems to be people who have a lot of beds in either detox or residential and are struggling to fill those right now.
“Certainly, there is still a market for quality providers who are doing things the right way. It just seems like a lot are struggling.”
In its Behavioral Health M&A Report for the fourth quarter of 2019, Mertz Taggart says it tracked 21 transactions overall in behavioral health, including deals not publicly announced. For the year, 2019 saw 85 deals, down slightly from the 97 transactions recorded in 2018.
Of the 21 transactions in the fourth quarter, 10 were in the addiction treatment sub-category. Consistent with other industry analysts’ findings, Mertz Taggart says private equity is showing increased interest in autism services, and there is a potential for add-on transactions over the next 3-to-5 years.
Positioned for acquisition
Mertz Taggart noted in its report that with healthcare in general placing a greater emphasis on value-based services, providers benefit by demonstrating quality of care. For addiction treatment center operators looking to be acquired or draw investment from private equity, Taggart says there are several traits that will help draw interest from investors, starting with keeping a modest capacity. Some operators have gotten “too far out over their skis” in pursuit of aggressive growth, Taggart says.