Behavioral Health Investors Shift Focus from Rapid Expansion to Market Depth
By Laura Lovett | November 2, 2026
In 2021, the behavioral health dealmaking market was characterized by:
- Double-digit multiples
- Rapid state expansion by operators
However, the landscape has shifted significantly. Today, buyers prioritize:
- Deep market penetration
- Strong quality metrics
- Effective customer acquisition cost management
Behavioral health providers are reevaluating their growth strategies, moving away from rapid state expansion towards a more focused approach.
Doug Shinkle, Partner at Lorient Capital (private equity firm with behavioral health investments), emphasized this shift at the Behavioral Health Business' INVEST event:
"It’s gone from dots on a map, which was what folks were effectively paying for ... to [an emphasis] on deeper penetration within the existing markets, fewer total markets, greater services depth, higher quality."
Lorient Capital's investments include Behavior Frontiers and Centria Healthcare.
Dr. Daniel Frogel, CEO of Thriveworks (one of the largest outpatient mental health providers), also noted this change:
"In the early part of the decade, large organizations really were able to throw money at your growth ... The number of patients and clients looking for care was very robust. ... Now what people are looking for: is this a stable company with durable resources, with durable referral sources, and are they actually demonstrating their ability to impact care, not just deliver care?"
Thriveworks operates 340 facilities and employs over 2,200 clinicians as of 2024.
The focus has shifted from simply expanding presence to building stable, high-quality operations with proven track records.