Pediatric Therapy M&A: Strategic Buyers Dominate as Deal Flow Recalibrates in Q3 2025
- lflopezcobo
- Jul 1
- 4 min read
Updated: Oct 9
The merger and acquisition (M&A) landscape for the pediatric therapy sector, including segments like ABA, OT, PT, and ST, underwent a significant shift through the first three quarters of 2025. While transaction volume decelerated in Q3 2025, the market remained structurally robust, driven by resilient demand and a decisive change in buyer composition.
A Year of Two Halves: M&A Volume Flattens After Strong Start
The year began with a burst of activity in the first quarter, with Q1 2025 recording 15 transactions, a high-water mark for a single quarter since Q2 2022.
Source: Mergium research.
Notes:
2025 figures up to September 30th, 2025
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.
Strategic Buyers Drive M&A Forward
As the industry moved into the second and third quarters, transaction volume moderated, reflecting broader macroeconomic uncertainties, including elevated interest rates, potential higher inflation rates due to newly imposed tariffs for international trade, and uncertainties regarding the future of Medicaid spending.
The total transaction count for the first nine months of 2025 reached 26 deals, putting the industry on pace to potentially match or slightly exceed the full-year volume of 35 deals recorded in 2024. The data suggests that while the pace slowed, the fundamental tailwinds of high demand for pediatric services continue to attract investment.
Source: Mergium research.
Strategic Acquirers Emerge as the Dominant Force
The most profound shift in 2025 has been the changing profile of the typical buyer. Historically, private equity (PE) platform companies focused heavily on "add-on" acquisitions to build scale. This year, the trend reversed, with strategic acquirers taking the lead.
Strategic buyers, defined as acquisitions of practices done by a company that is not a PE nor a Platform of a PE, accounted for a significantly larger share of the deal volume.
Source: Mergium research.
This strategic dominance marks a continuation of a trend seen in the first half of the year. For Private Equity, a notable slowdown in platform add-ons (down to 25% of volume) coincided with a firm trend in private equity buyouts and secondary buyouts. This is indicative of PE firms with extended holding periods exiting their investments and the continuing interest in this segment by institutional investors.
Source: Mergium research.
Private Placements Remain an Accessible Capital Source
For therapy practices not yet ready for a full sale, private placements remained a steady source of growth capital.
The data highlights that since 2019, the primary demand for capital remains with smaller, emerging practices.
48% of all private placement deals were in the <$5 Million range.
The second most common tranche was the $5M-$20 Million range.
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.
This segmentation underscores the ongoing trend of capital being deployed to professionalize and scale smaller, high-growth practices, positioning them for future M&A activity.
Outlook for Q4 2025 and Beyond
As the market enters Q4, the expectation is for a modest recovery in deal volume. Clarity on macroeconomic factors, coupled with the continued necessity for PE firms to execute exits from their long-held platforms, is expected to drive activity. While strategic buyers have dominated the headlines this year, the market remains liquid, favoring sellers who can demonstrate sustainable margins, strong compliance, and excellent clinical outcomes in a sector defined by inelastic, growing patient demand.
What Acquirers Seek in M&A Targets
Buyers in this sector are on the lookout for merger and acquisition targets that demonstrate several key qualities:
Strong clinical outcomes and a clean compliance record with both Medicaid and private insurance.
Consistent revenue growth coupled with sustainable, healthy profit margins.
A diversified mix of payers and clear potential for future growth.
Low therapist turnover and effective management.
Well-functioning information systems (both financial and operational) and established, efficient internal processes.
Effective training models that foster positive learning environments.
Seller valuation expectations that are realistic and aligned with 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