There are not enough therapists in America. There are not enough psychiatrists, not enough addiction counselors, and not enough clinic beds. The distance between those who need care and those who can provide it grows wider each year.

More than sixty million American adults experienced mental illness in 2024, according to Mental Health America. One quarter of those with mental illness reported an unmet need for treatment. For every mental health provider in the United States, there are roughly 320 people. Average wait times for a first appointment now exceed two months in many regions, and more than one in ten emergency department visits at American hospitals involve mental health care—patients turning to ERs because no other door will open.

This is the landscape that has made behavioral health one of the most sought-after investment categories in American healthcare. The gap between supply and demand, between the patients who need care and the providers who can offer it, has created what financiers call a market opportunity—and what families experience as a daily reckoning with a system stretched beyond capacity.

The dealmakers have taken notice. According to Capstone Partners, transactions in the behavioral health sector rose 47 percent year-over-year through the first three quarters of 2025, with 75 announced or closed deals. PwC analysts predict the health services M&A market will regain strength in both deal value and volume in 2026, with behavioral health platforms among the subsectors commanding the strongest multiples. Private equity firms, sitting on substantial dry powder after a relatively quiet 2024, are racing to deploy capital—and mental health, by most accounts, sits near the top of their lists.

Few people have a clearer view of this collision between crisis and capital than Adam Abramowitz. As managing director and co-head of healthcare & life sciences at Intrepid Investment Bankers, a prominent middle-market firm based in Los Angeles, Abramowitz has spent more than two decades advising entrepreneurs and healthcare companies on mergers and acquisitions. He helped build Intrepid’s healthcare practice into one of the most active in the Western United States, and was recently named “Healthcare Trusted Advisor of the Year” by the Los Angeles Business Journal. His recent transactions include advising Your Behavioral Health, a Southern California provider of mental health and addiction treatment services, on its sale to Comvest Partners.

“We’re very excited about the mental health and behavioral M&A outlook for 2026,” Abramowitz said in a recent interview with Acuity Media Network. “I keep getting phone calls from investors looking to find companies to invest in or acquire. There just seems to be a tremendous amount of patient demand, and maybe not enough service providers.”

The Outpatient Pivot

Investor appetite is not distributed evenly across care modalities. Abramowitz has observed a marked shift toward outpatient models—such as partial hospitalization programs, intensive outpatient programs, and other treatment structures that allow patients to receive care without long residential stays. The appeal, he explains, is both clinical and financial.

“Recently, we’ve been seeing more activity and interest in outpatient models that maybe can enable patients to get treatment without having to commit to a longer residential or inpatient stay,” Abramowitz said. “It seems like insurance companies like that, because outpatient models can maybe be more cost-effective. And also, patients can sometimes step down more quickly from higher acuity levels of care.”

The dynamic reflects a broader tension in American healthcare: how to meet overwhelming demand while satisfying payers who want predictable costs. Medicaid alone accounts for one in four dollars spent on mental health and substance use disorder treatment nationwide, making state reimbursement policies a critical variable in any investment thesis. In pediatric autism services—another category attracting significant investor interest—the supply-demand imbalance has become particularly acute. The CDC now reports that one in 31 eight-year-old children in the United States has been diagnosed with autism spectrum disorder, up from one in 36 just two years ago. Demand for Board Certified Behavior Analysts has surged more than 5,800 percent since 2010, according to the Behavior Analyst Certification Board, yet providers still struggle to meet patient needs.

Reading the Red Flags

For all the enthusiasm, Abramowitz approaches potential deals with the wariness of someone who has seen transactions unravel over issues that should have been caught earlier. When his team evaluates a behavioral health provider, they look beyond revenue figures and growth trajectories to examine the operational fundamentals that signal whether a business can sustain itself after the ink dries.

“If there’s a very high degree of employee turnover, that would be a red flag,” Abramowitz said. “If they’re not getting consistent referrals from other healthcare providers, that’s also a red flag.”

The Behavioral Health Center of Excellence, now a fully owned subsidiary of the Council for Autism Service Providers, has reported median turnover rates of 65 percent among ABA providers, while other estimates suggest the figure may reach 75 percent for behavioral health technicians. The costs are substantial—recruiting, hiring, and training a new clinician can amount to 30 to 200 percent of their annual salary—but the clinical impact is often worse. High turnover disrupts continuity of care, forcing patients to rebuild therapeutic relationships and potentially delaying progress toward treatment goals.

Abramowitz pays particular attention to where a company’s patients come from. A provider that receives most of its referrals from physicians, hospitals, and other healthcare organizations carries an implicit stamp of credibility. One that relies predominantly on internet advertising and social media marketing may warrant closer scrutiny. “Sometimes, if a company gets all of their referrals from, say, internet or social media marketing—look, that can be okay, but you just have to have your antenna up because it may be a little less focused on potential quality there,” he said.

Then there is compliance. “Have they been audited by their payers? Have they passed audits from their payers? Have they ever been subject to any sort of examinations or investigations?” Abramowitz said. “These are all things that we want to make sure we understand.”

Building for the Long Run

For founders contemplating a sale—or simply hoping to build a company that might one day attract investor interest—Abramowitz offers counsel that runs somewhat counter to the usual advice about maximizing short-term metrics. Start, he says, with outcomes.

“First, I think you really have to make sure you build the right operations and infrastructure and clinical program to deliver good outcomes,” he said. “Because ultimately, if you can deliver good outcomes and satisfy those stakeholders, that hopefully will fuel the flywheel to get more patients coming and will drive growth. You don’t want to just grow without thinking about providing high-quality care.”

The stakeholder lens matters. A behavioral health provider must satisfy patients and their families, referring clinicians, insurance companies, and employees—the registered behavior technicians, BCBAs, therapists, and support staff whose willingness to show up and deliver care determines whether the enterprise functions at all. “You really have to think about all those stakeholders and make sure that everyone feels good about the outcomes,” Abramowitz said. “It’s not like the ends justify the means.”

Beyond clinical quality, Abramowitz emphasizes financial transparency—not as an appeal to investors, but as a tool for management. “You can’t monitor what’s not measured,” he said. “Making sure that you can really have good financials and figure out, ‘Hey, are we profitable? Are there things we should invest more in, or things we should reduce costs?’”

“Build the business that you want to build,” Abramowitz advised. “Don’t just build something that you think a buyer or an investor will want. If you build something to have good outcomes and a good financial profile, you should have good options when you’re ready.”

The Policy Overhang

The macro environment, as always, looms over individual transactions. Interest rates, which constrained deal activity in 2023 and 2024, have begun to stabilize, and PwC analysts note that a more favorable rate outlook is helping to unlock previously stalled exits. Yet Abramowitz is careful not to overweigh financial conditions in a sector where reimbursement dynamics often matter more than the cost of capital.

“You can spin it different ways,” he said. “If the economy is doing well, that always helps matters. But sometimes, if the economy is struggling, more individuals may enroll in Medicaid. There are a lot of Medicaid-focused providers, and so if those enrollments go up, that could mean more patient opportunities.”
The more significant concern, Abramowitz believes, is regulatory uncertainty. The Centers for Medicare and Medicaid Services has introduced substantial changes to reimbursement policies in recent years, and healthcare providers across the country are still digesting what those shifts mean for their operations.

“There’s been a lot of noise at CMS and the FDA and regulation,” he said. “Compliance, more than ever, is going to be important.”

It is, in its way, a fitting coda. The behavioral health sector has matured into a genuine investment category precisely because the underlying demand is so overwhelming—because there are more patients than providers, more need than capacity, more pain than treatment. The dealmakers who navigate this terrain must hold two truths simultaneously: that good care and good business can coexist, and that the patients behind the statistics deserve something more than mere financial optimization. For Abramowitz, the sector represents something rare. “Behavioral health is one of those spaces where you can do well by doing good,” he has said elsewhere. “There are real people and families behind the stats, and it’s incredible to watch these programs grow and help more people get access to care.”

The investors, it seems, are still listening.