For much of the past decade, applied behavior analysis occupied an enviable position in the landscape of healthcare services. Demand for autism therapy far outstripped supply. Insurance mandates swept across state legislatures, compelling payers to cover treatment. Private equity firms, flush with capital and hungry for fragmented markets ripe for consolidation, descended on the sector with checkbooks open. From 2016 to 2018, the dynamic was simple: put a company on the market, and buyers appeared almost immediately.
That era is over. What has emerged in its place is something more stratified, more exacting, and in certain respects, more revealing of the industry’s underlying vulnerabilities. Today, prospective acquirers have not abandoned ABA, but they have grown considerably more discerning about which companies merit their attention. The result is a market bifurcated along lines of scale and operational sophistication, where large, multi-state platforms command premium valuations while smaller, single-state operators face more compressed pricing, even when they attract serious buyer interest.
“It’s a tale of two cities,” said Scott Kremeier, a managing director in the healthcare investment banking group at Piper Sandler, where he focuses on healthcare services. “Platforms of scale, usually multi-state, with north of fifteen-plus locations, ideally providing more than just ABA services—those are going to trade at a good premium valuation. Platforms that have a diversified model between center and home still get interest. But single-state operators where the investment has not been made in infrastructure, where recruiting and retention is probably not as good as it should be? Those are the ones where you probably trade at a bit of a discount.”
The distinction may sound like standard private equity logic: bigger is better, diversification reduces risk. But in ABA, the implications run deeper, touching on questions of clinical quality, workforce stability, and the long-term sustainability of an industry that has grown rapidly without always developing the operational underpinnings to match.
The Infrastructure Imperative
When Kremeier describes what buyers look for in an ABA platform, clinical quality functions as table stakes—a baseline expectation that must be confirmed rather than a differentiator. What distinguishes one acquisition target from another is a portrait of operational rigor: key performance indicators tracked systematically, utilization rates optimized, cancellation policies enforced and backfilled, retention metrics monitored for both BCBAs and RBTs. The questions a sophisticated buyer asks are not primarily about treatment philosophy. They are about whether the business has been built to run efficiently and to scale.
“I would look at it and say, what’s the staffing level in the clinic? What is the utilization that you’re getting out of your BTs? Do you have a lot of cancellations? Are you able to backfill from that? What does the waiting list look like?” Kremeier explained. “If utilization is at a certain percent and that’s a good one, great. If it’s below that, you’ve probably got some room. If it’s materially below, that’s a big red flag.”
Retention figures prominently in the calculus. The ABA industry has long struggled with turnover, particularly among registered behavior technicians, who provide the bulk of direct therapy hours. The work is demanding, the pay often modest, and the emotional toll considerable. Kremeier noted that if a company can extend the average tenure of an RBT from six months to eight months, that represents a material improvement in operational stability.
Caseload ratios matter too, though here the financial logic begins to intersect with clinical concerns. A BCBA supervising eight to ten children can provide meaningful oversight; one juggling fourteen or fifteen cases risks burnout and diminished quality of care. Buyers recognize this not merely as a clinical problem but as a business risk. Overloaded clinicians leave. When they leave, they take institutional knowledge with them, and the cycle of recruitment and training begins anew.
“BCBAs, in general, don’t want to handle more than eight to ten kiddos,” Kremeier said. “It becomes a bit of a burnout. They realize that they’re not doing a good job, and that drives them out of the industry.”
The Geography of Risk
State-level dynamics have always mattered in ABA. Reimbursement rates vary considerably across jurisdictions, as do licensing requirements, labor pools, and the political appetite for expanding or constraining autism services. But the current environment has sharpened buyers’ focus on geographic considerations, transforming what was once a secondary factor into a central element of due diligence.
Kremeier suggested that few states are entirely off-limits, but the calculus varies. Rural areas present obvious challenges: it is harder to recruit BCBAs to rural Louisiana than to Dallas or Chicago. States with robust metro centers and favorable reimbursement environments remain attractive. North Carolina was historically considered desirable territory, though recent concerns about fraud and proposed Medicaid cuts have introduced new complexities. Tennessee has improved its standing. California, once a stronghold, now prompts more cautious evaluation given staffing pressures and regulatory uncertainty.
“Folks are being very thoughtful about what the reimbursement dynamic looks like, what the recruiting environment looks like, and what the overall patient population looks like,” Kremeier said. A market needs sufficient population density to ensure that as children complete treatment or age out of services, new patients are entering the pipeline to sustain demand.
Outcomes as Currency
Perhaps the most significant shift in buyer expectations involves outcomes measurement. For years, ABA providers could operate without rigorous systems for tracking clinical progress. That is no longer the case. Private equity firms now ask pointed questions about what outcomes a company monitors, and payers have begun applying similar scrutiny.
The underlying logic reflects a broader reckoning with utilization. Major insurers have begun calling out ABA costs on earnings calls, citing the therapy’s impact on their bottom lines. Their response has not been to deny coverage outright, but to question whether every child requires forty hours of weekly therapy, and whether that intensity should persist for years without demonstrated improvement.
“Payers over the last couple of years have taken, specifically the last year, you’ve seen it now called out on earnings calls for a couple of the large payers,” Kremeier observed. “Look, ABA is impacting the bottom line. And so they’re trying to be thoughtful around, does every kiddo need forty hours a week? Arguably, no. And do they need forty hours a week for three years? No. There’s an expectation that [the hours] will probably come down.”
For providers, the implication is clear: those who can demonstrate measurable progress and correlate outcomes with authorization levels will find themselves better positioned, both with payers and with potential acquirers. Those who cannot may find their valuations compressed accordingly.
The Professionalization Wave
One response to the industry’s operational challenges has been an influx of management talent from outside ABA. Executives with experience scaling dental practices, urgent care networks, and health systems have begun crossing over into behavioral health, bringing with them playbooks developed in more mature sectors.
Kremeier views this development favorably. Many ABA companies were founded by clinicians or entrepreneurs with deep passion for the work but limited experience managing growth. They know how to deliver care; they may not know how to approach de novo expansion, build recruiting pipelines, or implement the financial and IT infrastructure required for a multi-state operation.
“Folks who have been able to scale platforms, whether it’s urgent care, dental, health systems, they have that experience that they can come in and start to help as we think about scaling platforms in the behavioral space,” Kremeier said. “They know how to move a platform from ten to thirty locations. It’s good to have that.”
The crossover extends beyond the CEO level. Chief growth officers, development officers, and HR leaders with multi-site healthcare experience are increasingly finding roles in ABA, bringing best practices for recruiting, retention, and operational standardization. Whether this professionalization improves clinical outcomes or merely financial performance remains an open question, though proponents argue the two need not be mutually exclusive.
What It Would Take
Deal activity in ABA, like healthcare services more broadly, has not returned to pre-pandemic levels. The frenzy of 2016 to 2018 gave way to a more cautious posture as private equity firms adopted what Kremeier described as a “risk off” mentality. Interest rates rose. Valuations in adjacent sectors like healthcare IT and pharma services became more attractive. Capital migrated accordingly.
Now, Kremeier sees signs of a thaw. Valuations in those alternative sectors have grown frothy, prompting investors to reconsider healthcare services as a source of risk-adjusted returns. Lower interest rates would help on the margins, though Kremeier does not expect a return to the era of near-zero borrowing costs. What the market needs, he suggested, is a series of successful exits that demonstrate the viability of ABA investments made in recent years.
“You need to see good exits by private equity groups and others where folks can point to it and say, ‘Aha! They had a successful exit, we’ve kind of broken the logjam in the deal-making space,’” Kremeier said. “I don’t think there’s this dam that’s all of a sudden going to break. What I’m expecting to see is a slow and steady kind of uptick as deals get done, capital gets deployed, and folks feel more comfortable reinvesting in healthcare services.”
For smaller ABA providers watching this landscape unfold, the message is sobering but not hopeless. Scale may command a premium, but scale is not built overnight. The companies that position themselves for eventual acquisition, or simply for long-term sustainability, will be those that invest in the infrastructure, retention strategies, and outcomes measurement systems that sophisticated buyers now demand. The alternative is to remain on the discount side of the divide, competing for attention in a market that has learned to be selective.
