Private equity has kept a close eye on the behavioral and mental health industries in recent years. All told, investors have backed 136 U.S.-based companies that deal with mental and behavioral disorders since the beginning of 2002, according to the PitchBook Platform.
PE interest in the space has come in two separate waves. Firms completed 21 deals in 2006, which had been a five-year high going back to 2002. Sentiment declined over the next three years, dwindling to only six deals in 2009, before picking up again significantly in 2010 and 2011 and hitting an 11-year high of 27 deals in 2011. In fact, dating all the way to 2002, almost half (45%) of all PE investments in the mental and behavioral health space have occurred since the beginning of 2010.
Broken down by region, investors have focused more on the south and southeast in the timeframe, with the south accounting for 25% of the deal activity and the southeast 15%. Tennessee and Texas picked up the most activity by state, with 11% and 10%, respectively. Investments were pretty evenly split between outpatient and inpatient providers, at 26% and 23%, respectively. Another 11% were for elder & disabled care providers. Education & training services companies made up 9% of deal activity in the timeframe.