Pediatric Therapy M&A: Strategic Buyers Dominate as 2025 Closes with Resilient Deal Flow
- Jul 1, 2025
- 4 min read
Updated: Mar 3
The merger and acquisition (M&A) landscape for the pediatric therapy sector—encompassing ABA, OT, PT, and ST—demonstrated remarkable resilience through the final quarter of 2025. While the middle of the year saw a period of recalibration, Q4 2025 concluded with a steady pulse of activity, driven by a continuation of private equity acquisitions and the confirmation of a structural shift toward strategic acquirers.
M&A Volume: A Resilient Finish to a Fluctuating Year
The year 2025 was characterized by a strong start and a steady finish. Following a peak of 15 transactions in Q1 2025, volume moderated to 8 deals in Q2 and 10 in Q3. The year concluded with 9 transactions in Q4 2025, bringing the annual total to 42 deals.
This final tally represents a 14% increase over the 37 deals recorded in 2024, signaling that despite macroeconomic and the industry specific headwinds like elevated interest rates, Medicaid spending uncertainties, among others, the fundamental demand for pediatric services remains a powerful magnet for capital.
Notes:
2025 figures up to December 31st, 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.
Institutional Interest Remains Resilient Despite Market Headwinds
The pediatric therapy and autism services sector continues to be a primary target for institutional capital. Despite broader industry turbulence, private equity firms maintained a consistent investment pace throughout 2025, closing 10 PE Buyouts. Furthermore, the market saw three secondary buyouts—transactions where platform companies transitioned from one private equity firm to another.
This activity underscores a clear trend: institutional investors remain committed to allocating capital to this behavioral health segment. This persistent interest is particularly notable given the significant number of aging platforms; as of year-end 2025, there are 13 companies that have been held for over 7 years and another 22 held for 5 to 7 years, signaling a robust pipeline for future institutional rotation and secondary market activity.
Strategic Acquirers Become Another Market Anchor
Another trend of 2025 was the rise of the strategic buyer. Historically, the market was dominated by Private Equity (PE) "add-on" acquisitions. However, in 2025, strategic acquirers (non-PE backed operating companies) emerged as a relevant force.
Strategic Buyers accounted for 16 transactions (38%) in 2025, a massive leap from the 7-8 deals seen in previous years.
PE Platform (Add-on) activity decelerated to 13 transactions (31%), down significantly from the 32+ deal levels seen during the 2021-2022 peak.
PE Buyouts and Secondary Buyouts remained steady, combining for 13 transactions (31%).
This shift suggests that established operating companies are aggressively using their balance sheets to expand footprints, while some PE firms shift their focus from rapid-fire add-ons to more selective platform rotations and others enter the industry.
The Private Equity Exit Pressure Cooker
As we look at the state of the market at the end of 2025, there is a clear "backlog" of platforms ready for exit. Data on current platform companies shows that a significant portion of the market is reaching maturity:
13 platforms have been held for over 7 years.
22 platforms have been held for between 5 and 7 years.
With over 35 platforms currently sitting in the "likely exit" window (5+ years of hold time), the industry is primed for a surge in secondary buyouts and strategic consolidations heading into 2026.
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.
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 2026: What Acquirers Seek
Success in the current environment favors sellers who can demonstrate:
Clinical Excellence: Proven outcomes and clean compliance records with Medicaid and private payers.
Operational Maturity: Robust financial and clinical information systems.
Staff Stability: Low therapist turnover and strong internal training models.
Realistic Valuations: Alignment with a market that prioritizes sustainable margins over "growth at any cost."
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