Despite the high demand for behavioral health services, M&A deal volume has not kept pace. According to data captured in the LevinPro HC platform, 24 Behavioral Health Care (BHC) transactions were reported in the first quarter of 2026, with five deals in the substance use disorder treatment (SUD) specialty.
The SUD M&A market has steadily seen a decline in deal volume since the record-high of 50 deals in 2021. In 2022, 45 deals were reported, with 24 in 2023, 19 in 2024 and only 18 in 2025. Between 2020 and 2022, SUD was the most active BHC specialty. In recent years, SUD has accounted for only about 23% of BHC deal volume, indicating waning investor appetite.
However, it is important to recognize that the peak activity of 2021 and 2022 represented a ‘levee-breaking’ surge, fueled by a backlog of demand in the post-COVID-19 deal environment.
But why is the M&A activity not reflective of patients’ high demand for substance use services? What has caused investors, especially private equity investors, to temper activity?
A major contributor to the decline in volume has been the policy changes in the One Big Beautiful Bill (OBBB). With the OBBB looming over investors’ heads, there was hesitancy to dip into the market throughout 2025. Between eligibility requirements and funding cuts, providers could see their census decline and reimbursement rates fall, creating significant financial headwinds for organizations.
While much of the doubt surrounding the OBBB has subsided, investors have been slow to return to high levels of dealmaking.
Notably, private equity interest has waned significantly. In 2020, PE firms, including portfolio companies, accounted for 77% of the SUD M&A activity. This has steadily decreased (58% in 2021, 49% in 2022, 42% in 2023, 32% in 2024 and 39% in 2025).
But it wasn’t just the OBBB that contributed to the decrease in deal activity. In the LevinPro team’s conversations with industry experts, several people pointed out that the cost of labor has put a large burden on backers. Facilities are struggling to hire and retain qualified professionals because wages have become increasingly competitive and expensive.
Panelists in our recent healthcare webinar even noted that some investors have prioritized “access to labor” during their acquisition process to help alleviate the cost of labor.
Several experts, including those in the webinar, also addressed the idea that there was oversaturation of assets in 2021 and 2022, contributing to less attractive assets being put up for sale. Facilities are also closing at an alarming rate in 2025 due to low reimbursement rates and insufficient funding.
The number of investors who used to announce multiple transactions a year has decreased significantly. BayMark Health Services, a portfolio company of Webster Equity Partners, was once one of the more active buyers in the space, having reported 20 deals since 2020. However, its last deal was announced in 2022 when it purchased Nashville Recovery for an undisclosed sum.
BrightView Health has also not reported a deal since three announcements in 2022 and three in 2021. AppleGate Recovery, LLC has followed the same trend: three deals in 2021 and three in 2022, with no further announcements.
Other companies have decreased their deal announcements, but have not petered out entirely. These include Bradford Health Services, a Lee Equity Partners company, which reported four deals in 2024 and one in 2025. In February, it also announced the acquisition of Parkdale Center, an addiction treatment provider in Chesterton, Indiana. So far, this is the company’s only deal of the year.
However, there have also been companies that did not announce transactions until 2025 or 2026. Victory Recovery Partners is one of those companies; in February, it acquired Realization Center, an addiction treatment provider with locations in Manhattan and Brooklyn. Additionally, it announced the acquisition of North Shore Relationship Center, a group therapy practice in Port Jefferson, New York, highlighting the company’s emerging interest in multiple BHC specialties.
The largest SUD deal of 2026, by purchase price, is Mayfair Group’s acquisition of Praesum Healthcare for $18.5 million.
Praesum Healthcare is a provider of comprehensive behavioral health services, specializing in substance use and mental health disorders. In August 2025, Praesum Healthcare filed for Chapter 11 bankruptcy after breaching cash flow, profitability and free cash covenants on a $23 million loan (issued May 2023) from City National Bank of Florida. Following a lawsuit by the bank, a Miami-Dade County judge ruled against former co-owners Timothy Doran and Morgan Poncy. On November 17, 2025, the court ordered Doran to pay the bank $20.7 million, which includes $18.6 million in loan principal.
Little information about Mayfair Group or Mayfair / Mandi Group was disclosed. But it is likely a group of investors (an ad-hoc consortium or private buyer group) that formed specifically for this bankruptcy auction.
While no single headwind can be pinpointed as to why investors have scaled back in the behavioral health M&A market industry experts have generally attributed the decrease in deals to economic and policy headwinds. In response, many behavioral health providers have turned their focus toward de novo expansion, while others have paused growth altogether to concentrate on strengthening the performance and operations of their existing facilities.
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