Autism & Pediatric Therapy (ABA, OT, PT, ST) M&A and Capital Raise Analysis: Q1 2025 Highlights
- lflopezcobo
- Jan 15
- 4 min read
Updated: Apr 7
Mergium provides an analysis of mergers and acquisitions, as well as capital raises (private placements), within the autism services and pediatric therapy sectors, covering the period from 2019 through the first quarter of 2025.
M&A – The numbers
The first quarter of the year demonstrated robust activity, with a total of 14 recorded transactions. This figure represents the highest volume since the second quarter of both 2024 and 2022.
Merger and acquisition activity involving strategic buyers remained strong compared to preceding quarters.
Additionally, Q1 2025 saw three secondary buyouts, marking the highest number of such transactions since 2019, matching the levels observed in Q3 2019 and Q2 2024.
The subsequent graph illustrates the number of merger and acquisition transactions, categorized by buyer type and presented quarterly from Q1 2022 to Q1 2025.
Source: Mergium research.
Notes:
This analysis:
Focuses on practices that offer: (1) therapies for kids and young adults with autism and other disabilities; (2) treatments such as behavioral (applied behavioral analysis (ABA)), developmental (speech, occupational, physical, feeding therapies, and others), educational, and social relational; (3) services in-clinic, in-school, in-home, and/or telehealth; and (4) testing for autism.
Excludes companies that develop and market solutions, products, and tools to providers and families such as: (1) IT solutions (software, apps, and the like); (2) technologies for diagnostics tests (e.g. MARABio, Cognoa, BioROSA, EarliTec); (3) medications; (4) matching platforms; and (5) virtual reality devices.
Types of transactions and buyers:
PE (Buyout): Transactions by private equity firms (“PE”).
PE (Secondary Buyouts (SBOs)): Sale of practices by one PE to another PE.
PE (Platform): Typically, after closing of an M&A by a private equity, the acquired company (“Platform”) grows through acquisitions (“add-ons”) of smaller practices and de novo locations. The acquisitions of those smaller practices are registered here.
Strategic Buyer: These are acquisitions of practices done by a company that is not a PE, nor a Platform of a PE.
The study includes sales of majority and minority interests:
Sales of majority interests - 100% or more than 50% of shares or interests.
Sales of minority interests - Less than 50% of shares or interests.
Observable trends in the distribution of transactions by buyer group include:
A consistent increase in transaction activity from strategic investors over time.
A rise in secondary buyouts, driven by the sale of private equity-backed platform companies to other private equity firms, aligning with current private equity holding periods (as detailed below).
A decline in initial acquisitions by private equity companies.
A decline in add-ons.
Source: Mergium research.
M&A - PE Holding Times will favor M&A activity
Private equity firms typically maintain ownership of their platform companies for an average duration of five years. At the end of the first quarter of 2025, approximately 38% of existing platforms have been held for longer than this five-year average. These mature platforms are increasingly likely to seek an exit, which is expected to drive an increase in secondary buyout activity. Furthermore, once these platforms are acquired, they will likely continue to pursue additional mergers and acquisitions (add-on transactions) to further their growth.
Source: Mergium research.
Private Placements
The number of private placement transactions has also shown a quarterly increase, with six equity transactions recorded in the most recent six-month period.
The following graphs present the volume of private placements (both debt and equity) on a quarterly basis.
Source: Mergium research.
Notes: Private placement: These are acquisitions of shares and debt instruments by private investors when a company sells newly issued shares or acquires debt. These transactions are regulated by the U.S. Securities and Exchange Commission.
The majority of capital raises observed since 2019 have been for amounts under $5 million, followed by amounts in the $5 -$20 mm range.
Source: Mergium research.
Investor interest in pediatric therapy companies remains strong. This interest encompasses funding for traditional service delivery models (clinic-based, in-home, and school-based) alongside models that integrate digital solutions.
We anticipate that this type of capital raise activity will increase over time as owners become more aware of its availability in the capital markets and as smaller practices continue to professionalize their operations.es.
What To Expect Moving Forward
We project an increase in both merger and acquisition activity and private placements throughout 2025 and 2026. However, several dynamic factors could influence this trend. These include potential adjustments to Medicaid funding, state-level regulations impacting private equity M&A activity, fluctuations in interest rates, and the overall economic outlook.
Furthermore, changes in tax policy, particularly those affecting corporate income tax rates, could impact the valuation of practices.
Despite these variables, we anticipate a continued flow of private equity investment through buyouts and secondary buyouts. This expectation is supported by the substantial amount of uninvested private equity capital ("dry powder"), the significant fundraising success of healthcare-focused private equity firms in recent years, and the extended holding periods of existing platform companies within this sector.
What the Buyers Are Telling Us
Acquirers in this sector are seeking merger and acquisition targets that demonstrate:
Strong clinical outcomes.
Absence of significant compliance issues with Medicaid and private insurance.
Consistent revenue growth and sustainable, healthy profit margins.
A diversified mix of payers.
Potential for future growth.
Low therapist turnover and effective management.
Well-functioning information systems (financial and operational).
Established and efficient internal processes.
Effective training models and positive learning environments.
Seller valuation expectations aligned with the current macroeconomic conditions and the economic realities of the segment.
Additional resources:
If you need assistance selling or valuing your pediatric therapy practice, contact us.
If you need to read more about how to sell your pediatric therapy practice (ABA, OT, PT, ST), click here.
If you need to read more about selling a business, read more
If interested in reading more articles and insights by Mergium, click here
If interested in knowing about our experience in selling / acquiring healthcare services companies, click here