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It’s been a turbulent year for behavioral health and investors value certainty. While deals are still crossing the finish line, investors are taking a measured approach.
And while many investors are sitting on the sidelines, waiting to see how Medicaid cuts will impact the behavioral health sector, or how payers are transforming their autism services strategy, there are a few key private equity companies that are poised to enter the M&A market soon.
Behavioral Health Business has compiled a list of five private equity investors to watch in the coming year in regard to the behavioral health industry, whether because they have already made bets in the sector that haven’t panned out, are just wetting their feet in the sector or are primed to make meaningful deals in the sector.
Latticework Capital Management
Latticework Capital Management is notable because of its investment in one of the most active acquirers in the sector: Beacon Behavioral Health Partners.
Beacon now has more than 70 locations across the country and treats more than a million patients annually. The provider partners with psychiatrist-owned businesses, acquiring the practice and providing back-end support, while giving clinicians an ownership stake and allowing them to focus solely on clinical care.
Latticework invested in the company in 2020, meaning that the investment is approaching the end of its typical hold period. And there have been reports that partners are prepping for a deal. In November, Axios <a href="https://www.axios.com/pro/health-tech-deals/2025/10/29/latticework-capital-beacon-behavioral-auction” rel=”nofollow noopener” target=”_blank”>reported Latticework is shopping the company and that a competitive auction is set to begin in 2026. If sold, this could be a major deal for the behavioral health sector.
Latticework is no stranger to the behavioral health sector. It invested in Meadows Behavioral Health Care and sold it to Kohlberg & Company in May 2016.
I would be on the lookout to see if Latticework successfully exits Beacon Behavioral Health Partners in the next year or two and if it will continue to invest in the behavioral health sector.
Webster Equity Partners
Webster Equity Partners has been in the behavioral health sector for more than a decade and its portfolio includes some of the giants in the space, including Discovery Behavioral Health and BayMark.
However, these companies have recently faced significant headwinds. Webster initially invested in Discovery Behavioral Health’s predecessor, Center for Discovery, back in 2011 and recapitalized the company in 2017. The provider has grown significantly since this investment; at one time it operated more than 145 treatment centers.
Yet, the company has faced significant challenges, with real implications for the investor. At the beginning of the year, the provider defaulted on $280 million in debt, according to court documents. Its lenders, HPS Investment Partners and Capital One, took issue with Discovery’s debt-to-earnings ratio in its quarterly reports, leading the banks to take control of the operator’s assets, dismantle their board and install its own.
Since then, HPS Investment Partners announced it would take majority ownership in the company and named Pete Clarke, a veteran of dialysis provider DaVita Inc. (NYSE: DVA) its next CEO.
For Webster, the financial fallout remains unclear. Still, a lender-forced takeover is far from the exit the private equity investors hopes for.
And Discovery Behavioral Health wasn’t the only Webster portfolio company facing significant challenges this year. Recently, BayMark, one of the largest addiction treatment companies in North America with 287 locations, underwent a debt-for-equity restructuring, where the provider’s creditors will take control of the company as part of a deal to restructure.
The deal is not yet closed, and a filing explained that BayMark could file for bankruptcy in Q3 if the deal does not close. These troubles came after Webster reportedly tried to shop BayMark in 2019 and then again in 2025 without success.
In the case of both Discovery Behavioral Health and BayMark, there are larger questions about the role of investors in over leveraging providers.
While Webster’s assets have struggled recently, it has had one bright spot. In January, the company sold its autism portfolio company, InBloom. Axios reported that Elysium Management, the family office of Leon Black, the co-founder and ex-CEO of Apollo Global Management, acquired the provider for $75 million.
We are watching Webster Equity Partners to see if the public stumbles of BayMark and Discovery will make the investor shy away from the behavioral health sector or if these could serve as lessons learned for future investment moves.
Madison Health Group (MHG)
Madison Health Group is a newcomer on this list, and while they are technically branded as an innovation and investment group, I thought their investment in the sector was substantial enough to make the list.
The company has made just one major investment in the behavioral health sector so far, but it’s a big one. In February, Madison Health Group announced plans to purchase managed behavioral health provider Magellan Health from Centene Corporation (NYSE: CNC).
The deal is interesting because it will make Magellan an independent managed care behavioral health provider that is already serving 20 million people.
The other interesting note is that MHG’s team includes some of the biggest names in the behavioral health industry, including Christina Mainelli, former Quartet CEO, Christopher Molaro, CEO of NeuroFlow and Kenneth Fasola, former president at Centene Corporation.
While this will mark MHG’s first investment, the company’s website states it will invest in whole-person care, expanding care access, technologies, AI and data analytics.
We will be watching this organization to see how it guides Magellan in its next chapter as well as any future investments.
Aquitaine Capital
Aquitaine Capital is relatively new to the behavioral health sector. The investment firm focuses on transaction sizes from $10 to $200 million with an EBITDA of $3 million to $30 million.
The women-owned private equity firm placed its first bet in the autism sector earlier this year. In January, the firm made a major investment in Oklahoma-based autism provider KidsChoice, which was later renamed Mirabelle Care.
The provider was founded in 2020 and offers applied behavior analysis (ABA), occupational therapy, counseling, speech therapy and other services. At the time of the announcement, the company said it planned to grow the provider through new clinic openings, M&A and expanding its speech and occupational therapy offerings.
The provider has already faced some challenges since the acquisition. The Oklahoma Health Care Authority halted Medicaid payments to Mirabelle Care while a fraud investigation initiated during the tenure of the company’s previous ownership remained pending. However, the provider filed for and was granted an injunction in state court to have Medicaid payments resume while it worked through the complaint.
We will be watching to see if Aquitaine continues investing in the behavioral health sector and if it continues its efforts in autism services.
KKR is one of the largest private equity firms in the nation and has a number of behavioral health assets.
Its portfolio includes pediatric provider Brightline, autism provider BlueSprig Pediatrics and hybrid mental health care provider Geode Health.
While many of its portfolio companies have been somewhat quiet over the last year, there are a few interesting changes we will be watching. In 2025, BlueSprig named InnovaCare Health veteran Will Abbott as its new CEO. The provider has been relatively quiet in the M&A sector, though it’s important to note the company has one of the largest autism footprints in the country with more than 162 locations.
I’m also curious to see how KKR continues to develop its hybrid providers Geode Health and Brightline. Brightline was initially founded as a virtual provider but pivoted to a more hybrid approach. In 2024, it cut its operations in 45 states and reworked its go-to-market strategy. In 2025, it opened its first brick-and-mortar clinic and inked a deal with Northwell Health.
In October, the provider also named Kari O’Rourke, formerly president of Imagine Pediatrics, as its next CEO. I think Brightline’s evolution is particularly interesting in the context of private equity vs. venture capital funding. Brightline has funding from both venture firms, such as GV and Oak HC/FT, as well as major the PE firm KKR. While its initial thesis was very digital health-focused, the provider is now doubling down on a more traditional strategy. I’m curious if more venture-backed startups will begin to make this evolution.
KKR is one of the biggest names in the sector, and where it puts its money is an indicator of where the future of behavioral health is heading.
Companies featured in this article:
Aquitaine Capital, KKR, Latticework Capital Management, Madison Health Group, Webster Equity Partners
