Autism & Childhood Behavioral Health Services Market Update: Covid-19 To Have Lasting Impact on Need For Children’s Mental Health Services

M&A volume reached a record high in 2021 as activity persisted throughout the pandemic

Capstone Partners released its June 2022 Autism & Childhood Behavioral Health Services Market Update, reporting that the sector has grown at a rapid rate due to the increasing prevalence of developmental disabilities such as autism spectrum disorder; rising emotional, behavioral, and mental issues among school-aged children; and mounting recognition among parents and educators regarding the benefits of early intervention. Pandemic-induced shutdowns have exacerbated the rising levels of mental health issues for children and adolescents with isolation, technology usage, and drug and alcohol exposure being among the top impacts on mental health. As only half of children and teens have received treatment for behavioral issues, sector participants have scaled operations to meet market demand and treat underserved youth.

Autism & Childhood Behavioral Health Services sector merger and acquisition (M&A) volume reached a record high in 2021, with healthy levels of transaction activity in Q1 2022. While deal flow declined in the broader M&A market in 2020, sector M&A activity persisted throughout the pandemic as COVID-19 aggravated certain behavioral issues for children and adolescents, driving heightened demand for sector participants. Strategic buyers continued to comprise the majority of deals in 2021, led by private businesses vertically consolidating competitors to gain scale and expand geographic reach. Private equity firms have increasingly targeted sector participants in add-on engagements, with many sponsor-backed buyers completing multiple transactions to develop an omni-channel approach and improve patient outcomes. Both strategic and private equity acquirers have demonstrated an appetite for full-service child and adolescent mental health clinics offering outpatient services, inpatient care, and partial hospitalization. Notable sector deal activity includes three recently completed Capstone-advised transactions such as the sale of Conscious Discipline to Prairie Capital, Pinnacle Family Services’ sale to Palladium Equity Partners-backed Health Connect America, and The Stepping Stones Group’s acquisition of EBS Healthcare.

Also included in this report:

• How pandemic-induced isolation continues to take a heavy toll on mental health for children and teenagers.
• The impacts of adults’ mental wellbeing on children’s behavioral issues.
• How social media has been linked to children developing sleep, mood, and movement disorders.
• A breakdown of top child mental health clinics scaling operations through acquisitions to treat underserved and at-risk youth.