Key Takeaways
- Mergium Advisors tracked 42 pediatric therapy M&A transactions in 2025, a 14 percent increase over 2024.
- Strategic buyers accounted for 38 percent of pediatric therapy deals in 2025, up from single digits in prior years.
- EBITDA multiples for small OT, PT, and ST practices currently range from roughly 3x to 6x.
- As of year-end 2025, 13 private equity-held pediatric therapy platforms had been in portfolio for more than seven years and another 22 for five to seven years.
- BCBA job listings rose 28 percent to 132,307 in 2025
Ask a pediatric therapy practice owner what their business is worth and the answer will almost always arrive in the same form: a number, multiplied by EBITDA. The metric is ubiquitous across behavioral health M&A, the first figure quoted on conference panels, in pitch decks, and in the early conversations between practice owners and the advisors they hire to sell. It offers the appeal of simplicity: take a company’s earnings before interest, taxes, depreciation, and amortization, multiply by a figure drawn from comparable transactions, and arrive at a valuation.
The problem, according to Dr. Luis Lopez, is that in this particular sector, the simplicity is a mirage.
Lopez is the founder and managing partner of Mergium Advisors, a boutique M&A advisory firm that specializes in behavioral health and education transactions. He holds a PhD and has spent roughly 30 years in investment banking, the last five to seven of them focused on pediatric therapy and mental health. Mergium publishes quarterly M&A market reports tracking deal volume, buyer composition, and capital raises across autism services and pediatric therapy, encompassing ABA, occupational therapy, physical therapy, and speech therapy. His firm’s data offers one of the more granular windows into a market where nearly every transaction is private and confidential.
The picture that data paints heading into 2026 is one of a sector in transition. Valuations have come down from their early-2020s peak. The buyer mix is shifting. A backlog of private equity-held platforms is approaching exit. And the metric that most sellers reach for first may be the least useful tool for understanding what is actually happening.
Why EBITDA Multiples Mislead in Pediatric Therapy and ABA M&A
The conceptual logic of an EBITDA multiple is straightforward. If comparable companies in a sector have recently traded at, say, 6x to 8x their earnings, a practice with similar characteristics should fall somewhere in the same range. The method works well in public markets, where transaction data is disclosed and the financial details of both buyer and target are available for scrutiny. It works less well in pediatric therapy.
“When you go into private markets like this one, in which most of the transactions, if not all, are confidential, you don’t have information about what the EBITDA was at the time of closing,” Lopez said. “So if you don’t have that type of information, then it becomes very tricky to use multiples.”
Mergium’s published research on the topic identifies several compounding limitations. The comparable companies used to derive a multiple often carry different risk profiles, debt structures, and growth rates. Market sentiment can inflate or deflate multiples in ways disconnected from a practice’s fundamental value. The metric fails to account for different growth trajectories. A practice with rapidly expanding revenue and one with flat earnings can produce identical multiples, despite having fundamentally different prospects. And the absence of public transaction data makes the situation worse: any multiple circulating in the market is, at best, a secondhand estimate derived from whatever proprietary deal experience the person quoting it happens to have.
Lopez is not arguing that multiples are useless. He frames them as a “high-level approximation” that can orient a conversation. But his firm advocates for discounted cash flow (DCF) analysis as the more rigorous methodology, one that builds a valuation from the ground up by projecting a practice’s future cash flows, adjusting for its specific cost structure, financing, and risk profile, and discounting those flows back to present value.
“You have to go into the specifics of the target to see trends of margins, revenues, prospects,” he said. “I believe the methodology that captures this well is DCF, given the limitations in terms of information on other types of methodologies.”
The practical effect of the distinction matters. For small OT, PT, and ST practices, Mergium currently sees EBITDA multiples ranging from roughly 3x to 6x, with the figure climbing alongside the size of the practice. For larger ABA practices and platform-level companies, multiples extend from approximately 6x into the lower teens. But those ranges have narrowed from the levels seen earlier in the decade, when a surge of private equity capital drove what Lopez describes as a period of elevated willingness to pay.
“Valuations have decreased through time, especially since the start of the 2020s,” Lopez said. “Valuations in 2020, 2021, 2022 were larger in terms of multiples, or what buyers were willing to pay.”
The broader market data supports the thesis that the correction is real but not uniform. A December 2025 analysis from FOCUS Investment Banking found that across all behavioral health subsectors, 2025 multiples remained stable compared to 2023 and 2024, with premium outcomes concentrated among scaled, multi-state platforms with accreditation, diversified payer relationships, and strong clinical governance.
Autism platforms continued to command the highest multiples in the space, with well-run operations trading at 12x to 15x. The gap between what a best-in-class platform can command and what a smaller, single-service practice can expect has widened.
Tommy Spiegel, CFA, Vice President at Provident Healthcare Partners, said the gap between seller expectations and market reality is real but manageable when addressed early. Seller expectations, he noted, are still anchored in many cases to 2021 and early 2022 valuation levels.
“A key part of the banker’s role is ensuring that valuation expectations are aligned with what the market will actually bear before launching a process,” Spiegel said. “When expectations are meaningfully above market, it is typically a function of either not being closely attuned to current dynamics or receiving poor guidance.”
Spiegel also cautioned against taking reported multiples at face value. EBITDA definitions are not always consistent across deals, he said, and outcomes are often framed in the most favorable light. What circulates anecdotally can be higher than the reality. Still, he said the market for top-tier assets remains strong. “High-quality, scaled assets with strong clinical leadership, dense geographies, and demonstrated ability to recruit and retain BCBAs are still commanding very competitive valuations,” Spiegel said. “More challenged or subscale providers are where we see the most pressure and friction.”
35 PE-Backed Pediatric Therapy Platforms Are Ready to Exit: The Pressure Cooker Heading Into 2026
If the valuation picture has shifted, one of the forces behind it is structural. Mergium’s most recent report, covering full-year 2025, tracked 42 M&A transactions in the pediatric therapy sector, a 14 percent increase over the 37 deals recorded in 2024. The trend extends well beyond Lopez’s data set. According to data from Irving Levin Associates, deal volume across the broader behavioral health sector rose more than 42 percent year over year in 2025, reaching 104 publicly announced transactions, up from 73 in 2024 and 83 in 2023.
But the composition of who is buying has changed in ways that may prove more consequential than the volume figure alone.
Strategic buyers, non-private equity-backed operating companies, accounted for 16 pediatric therapy transactions in 2025, or 38 percent of all deals in Mergium’s data set. That figure was in the single digits in prior years. Lopez attributes the rise to a class of established operators that have matured to the point where acquisition is a natural growth strategy, funded from their own balance sheets rather than institutional capital.
The trend is not confined to pediatric therapy. A Capstone Partners analysis of the broader behavioral health sector found that strategic acquirers posted year-over-year gains of 105 percent in deal activity through the first three quarters of 2025, compared with a 9.7 percent uptick among financial buyers. Private equity add-on activity, which had been declining since 2021, ticked up 19 percent, suggesting renewed but more selective institutional interest.
Within Lopez’s narrower universe, PE platform add-on acquisitions decelerated to 13 transactions (31 percent of the total), down significantly from the 32 or more deals seen at the 2021 to 2022 peak. New PE buyouts, by contrast, held steady at 10 transactions, comparable to the pace seen in 2021 and 2022 and up from the lows of 2023. The sector also recorded three secondary buyouts, transactions in which a platform company transfers from one private equity firm to another.
The deceleration in add-on activity, Lopez argues, is a function of portfolio age. As PE firms hold platforms longer, they transition from acquisition mode to exit preparation. Mergium’s data quantifies the scale of that transition: as of year-end 2025, 13 pediatric therapy platforms had been held for more than seven years and another 22 for five to seven years. The standard private equity hold period is four to five years. With more than 35 platforms sitting in the likely exit window, the firm describes the industry as a “pressure cooker” primed for a surge in secondary buyouts and strategic consolidations heading into 2026.
“There are a number of practices that are already getting prepared to go out,” Lopez said. “Private equity firms need to return capital to their limited partners. So that’s a given.”
A January 2026 study published in JAMA Pediatrics added a broader quantitative frame. Researchers at Brown University identified 574 autism therapy centers owned by private equity firms as of 2024, spanning 42 states, with the majority acquired between 2018 and 2022 through 142 separate deals. The researchers found that investment was concentrated in states with higher autism diagnosis rates and fewer limits on insurance coverage. Lopez offered a measured assessment of PE’s overall impact.
“When you have capital coming into a sector helping to develop practices, to enhance quality, to enhance processes to support quality delivery, that’s very healthy,” he said. “There have been benefits to the industry from that point of view. On the other hand, you also see some cases in which the experience has not been healthy.”
Spiegel confirmed the exit pressure from the advisory side. There are more than 100 private equity-backed autism platforms, he said, and 65 percent or more are five or more years into their hold period. “We are seeing a clear increase in sponsor-led dialogues, particularly from platforms that are at or beyond the typical hold period,” Spiegel said. Many, he noted, were delayed by COVID, wage pressures, and other disruptions.
On whether those exits are meeting sponsor expectations, Spiegel drew the same line he drew on valuations more broadly: quality matters. “Top-tier platforms are still achieving strong outcomes, particularly those that have demonstrated a strong de novo playbook, payor diversification, and operational sophistication,” he said.
Post-Pandemic Margin Compression and the Diversification Bet Reshaping Pediatric Therapy M&A
Underlying the valuation correction and the shifting buyer mix is a more fundamental economic pressure that has reshaped what acquirers are willing to pay for and what they walk away from.
Post-pandemic wage inflation hit pediatric therapy providers hard. The sector’s cost structure is labor-intensive, with payroll representing the heaviest component of operating expenses. When inflation drove wages up, margins compressed. For practices with a heavy Medicaid payer mix, the compression was especially acute: fee increases from state Medicaid programs, in many cases, did not keep pace with the rising cost of labor.
“Inflation has played a key role,” Lopez said. “Increasing wages created margin compression.” On the payer side, he added, Medicaid fee increases in some states have not kept pace with rising labor costs, further accentuating the squeeze on providers.
The labor market data underscores why that pressure is unlikely to abate. According to the Behavior Analyst Certification Board and data firm Lightcast, BCBA job listings rose 28 percent in 2025 to 132,307. The number of certified BCBAs has grown to roughly 81,500, up 10 percent from the prior year, but the supply has not kept pace with the surge in demand. A December 2025 brief from HRSA projected substantial shortages across the behavioral health workforce through 2038. The workforce pressure feeds directly into deal economics: practices that cannot recruit and retain clinicians cannot sustain the margins that justify premium valuations.
The consequence for M&A is direct. Buyers have become more selective, scrutinizing payer mix, clinical outcomes, staff retention, and internal processes with greater intensity than they did during the years of rapid deal-making. Lopez’s year-end report lists clinical excellence as the first attribute acquirers are prioritizing heading into 2026, followed by operational maturity, staff stability, and realistic valuation expectations. Mertz Taggart’s Q4 2025 behavioral health M&A report struck a similar note, describing a market that has shifted from “growth at any price” to a focus on clinical quality, sustainable margins, and operational integration.
“Outcomes and quality of clinical delivery are important, because at the end of the day, that drives profit,” Lopez said. “If there is no quality delivery, problems start to show up, especially through compliance problems: relationships with payers in terms of termination of contracts, issues with Medicaid.”
One response to the margin pressure, and to the evolving demands of acquirers, has been diversification. Lopez described a growing trend among ABA-only practices to expand into occupational, physical, and speech therapy, and in some cases to add a medical or mental health component. Practices offering that broader service mix are more attractive to buyers, he said, because they reduce concentration risk and create multiple revenue streams under a single operational roof.
“I see more interest in including services, especially for those ABA-only practices, to bring in OT, PT, and ST,” Lopez said. He noted that while no single subsector is dominating M&A activity, practices that combine ABA with complementary therapies are of interest to a subset of buyers.
The demand side of the equation shows no signs of softening. The CDC’s most recent data from the Autism and Developmental Disabilities Monitoring Network, published in April 2025, found that approximately 1 in 31 children aged 8 has been identified with autism spectrum disorder, up from 1 in 36 in the prior report. The prevalence figure has risen steadily for two decades. Whatever the trajectory of valuations, deal structures, and buyer composition, the population of children who need these services continues to grow.
Spiegel offered a more qualified view of the diversification thesis. While some buyers do value multi-disciplinary models, he said, the picture is not as straightforward as “more services equals more value.”
“There is a clear cohort of investors who prefer a focused, single-service, single-setting model, for example, center-based ABA, where the emphasis is on doing one thing exceptionally well,” Spiegel said. A multi-disciplinary, multi-setting platform is meaningfully more complex to operate, he added, “and that complexity does not automatically translate into a higher multiple. It can command a premium if the business is executed well operationally and demonstrates true integration and scalability, but that outcome is not guaranteed.”
On the Medicaid front, Spiegel pointed to a shift in how margin pressure is manifesting. Rates themselves have held or improved modestly in some markets, he said, but the real squeeze is now coming through authorized hours. “Payors are increasingly focused on utilization management, including tighter authorization of hours, more frequent reauthorizations, and greater scrutiny on medical necessity,” Spiegel said. The result is that even where rates are stable, providers are contending with reduced or more volatile authorized hours, which directly affects revenue and clinician utilization.
The picture Lopez paints is one in which the era of rapid-fire acquisitions at generous multiples has given way to a more disciplined market. The capital is still there. The interest is still there. But the buyers who are deploying it are asking harder questions, looking more closely at the clinical and operational substance behind the numbers, and, increasingly, coming from outside the private equity world entirely. For practice owners contemplating a sale, the shift carries a straightforward implication: the number on the headline multiple matters less than the story the practice’s fundamentals can tell.
“Multiples are good as a high-level approximation to valuation,” Lopez said. “But you have to go into the specifics of the target.”
Frequently Asked Questions
What are current EBITDA multiples for ABA and pediatric therapy practices?
EBITDA multiples in pediatric therapy vary significantly by practice size, service type, and operational quality. As of year-end 2025, Mergium Advisors reports that small OT, PT, and ST practices are trading at roughly 3x to 6x EBITDA. Larger ABA practices and platform-level companies are seeing multiples in the range of 6x to the lower teens. Best-in-class autism platforms with strong clinical governance, multi-state scale, and diversified payer relationships continue to command the highest multiples in the space, with a December 2025 FOCUS Investment Banking analysis finding well-run operations trading at 12x to 15x. These ranges have narrowed from 2020 to 2022 peaks, when a surge of PE capital drove elevated willingness to pay. Provident Healthcare Partners’ Tommy Spiegel cautions that reported multiples should be taken with skepticism: EBITDA definitions are not consistently applied across deals, and anecdotal figures often reflect outcomes framed in the most favorable light.
Why are EBITDA multiples an unreliable valuation tool for pediatric therapy practices?
Three structural limitations undermine the reliability of EBITDA multiples in pediatric therapy M&A. First, nearly all transactions in this sector are private and confidential, meaning the EBITDA figure at closing is rarely disclosed. Any published multiple is at best a secondhand estimate based on the deal experience of whoever is quoting it. Second, the comparable companies used to derive a multiple often carry different risk profiles, debt structures, and growth trajectories: a practice with rapidly expanding revenue and one with flat earnings can produce the same multiple despite being fundamentally different businesses. Third, market sentiment can inflate or deflate multiples in ways that are disconnected from the practice’s underlying fundamentals. Mergium Advisors advocates for discounted cash flow (DCF) analysis as the more rigorous alternative, building a valuation from projected future cash flows adjusted for the practice’s specific cost structure, risk profile, and growth prospects rather than deriving a number from transactions whose details are largely unknown.
What is driving the surge in strategic buyers in pediatric therapy M&A?
Strategic buyers, defined as non-private equity-backed operating companies, accounted for 38 percent of pediatric therapy M&A transactions in 2025, up from single digits in prior years. Mergium’s Dr. Luis Lopez attributes the rise to a class of established operators that have matured to the point where acquisition is a natural growth strategy, funded from their own balance sheets rather than institutional capital. This mirrors a broader trend across behavioral health: Capstone Partners found that strategic acquirers posted 105 percent year-over-year gains in deal activity in 2025, compared with a 9.7 percent uptick among financial buyers. Strategic acquirers often bring different valuation frameworks and integration goals than PE firms, placing greater weight on geographic complementarity, service line expansion, and referral network density than on financial engineering. For practice owners, the increasing presence of strategic buyers means a different kind of buyer conversation, one focused more on operational fit and less on near-term EBITDA optimization.
Why are so many PE-backed pediatric therapy platforms preparing to exit in 2026?
Mergium’s year-end 2025 data shows that 13 pediatric therapy platforms have been held by private equity for more than seven years and another 22 for five to seven years. The standard PE hold period is four to five years. The extended holds reflect the disruptions of the COVID-19 pandemic, post-pandemic wage inflation, and the broader slowdown in behavioral health M&A activity that compressed deal volume from 2021 through 2023. PE firms need to return capital to their limited partners, creating what Mergium describes as a “pressure cooker” of exits heading into 2026. A January 2026 JAMA Pediatrics study identified 574 autism therapy centers owned by PE firms as of 2024, the product of 142 deals spanning 42 states. With more than 35 platforms sitting in or beyond the typical exit window, secondary buyouts (PE firm to PE firm transfers) and sales to strategic acquirers are both expected to increase in volume.
How is post-pandemic margin compression affecting pediatric therapy valuations?
Post-pandemic wage inflation created persistent margin pressure across pediatric therapy because the sector’s cost structure is labor-intensive, with payroll representing the largest operating expense. When inflation drove wages up sharply, margins compressed. For practices with heavy Medicaid exposure, the compression was compounded by Medicaid fee increases that did not keep pace with rising labor costs in many states. The current pressure is evolving: Provident’s Spiegel notes that Medicaid rates have held or modestly improved in some markets, but the squeeze is now manifesting through authorized hours, with payers tightening utilization management, requiring more frequent reauthorizations, and applying greater medical necessity scrutiny. BCBA job listings rose 28 percent in 2025 to 132,307 while the certified BCBA supply grew only 10 percent, keeping upward pressure on clinician compensation. The direct M&A consequence is that buyers are underwriting more conservatively: placing greater emphasis on the stability of authorized hours by payer and state, labor models, clinician productivity, and exposure to favorable reimbursement environments.
What do buyers actually prioritize when evaluating a pediatric therapy practice for acquisition?
Lopez’s year-end 2025 report lists clinical excellence as the first attribute acquirers are prioritizing heading into 2026, followed by operational maturity, staff stability, and realistic valuation expectations. Mertz Taggart’s Q4 2025 behavioral health M&A report describes a market that has shifted from “growth at any price” to a focus on clinical quality, sustainable margins, and operational integration. Spiegel of Provident Healthcare Partners emphasizes several specific factors: the ability to recruit and retain BCBAs, geographic density that supports efficient operations, payer diversification that reduces reliance on any single state’s Medicaid policies, strong clinical leadership, and a demonstrated de novo growth playbook. On service mix, there is a genuine divide: some buyers prefer focused single-service models while others value multi-disciplinary platforms, but Spiegel cautions that multi-disciplinary complexity does not automatically translate into a higher multiple. It can command a premium when executed well operationally and demonstrably scalable, but that outcome is not guaranteed.
