Selling a behavioral health company is often likened to marriage, but the reality is there’s a level of commitment involved that goes beyond even that. Sam Himelstein, co-founder and CEO of Family Spring, put it this way: “It’s not like marriage, because in marriage, you can get divorced, and in this, I think, it might be a little messy.” The process of a behavioral health company sale is emotional, complex, and full of unseen considerations—making it more akin to a long-term commitment rather than a simple transaction.
Himelstein shared these insights at the Behavioral Health Business INVEST conference in October, where he spoke about the often-overlooked factors involved in behavioral health transactions. While he and his business partner are currently building their company with no immediate plans for an exit, the question of Family Spring’s future is something they think about constantly. The future, after all, plays a crucial role in how a company evolves today.
Joining Himelstein on the panel was Joshua Rosenthal, who sold his company, Manhattan Psychology Group, to ARC Health in 2022. Kevin Taggart, managing partner at Mertz & Taggart, who advised Rosenthal on his sale, was also part of the conversation. The panelists shed light on the emotional and practical aspects of selling a behavioral health company, emphasizing the importance of relationships, personal compatibility, and long-term goals over simply chasing the biggest financial offer.
The Emotional and Practical Aspects of a Behavioral Health Company Sale
Behavioral health dealmaking, which soared to new heights in 2021, has cooled somewhat in recent years. Despite this slowdown, a number of aggressive investors and buyers—such as ARC Health—are still very active. Since its inception in 2021, ARC Health has completed at least 18 transactions, underscoring the continued demand for behavioral health companies. But as Rosenthal and Himelstein pointed out, the decision to sell isn’t just about the money. It’s about the relationships built with potential buyers and ensuring that the company’s mission and values align with those of the acquirer.
“The money is very alluring,” Rosenthal admitted. “You might be like, ‘Oh my God, they’re offering the biggest check, right?’ But then that comes with so much baggage that, in the end, it’s not worth it.” Rosenthal suggests that potential sellers look beyond the financial aspect and focus on the compatibility between the seller and the buyer. He advised fellow CEOs to consider whether they would enjoy spending time with the prospective buyer, whether the buyer treats the management team with respect, and if their values align with the company’s mission.
For Rosenthal, these factors were particularly important because, after the sale, he stayed on as the CEO of Manhattan Psychology Group. He was deeply invested in ensuring that the transition would be as smooth as possible, both for himself and for his team. Before deciding to sell to ARC Health, Rosenthal made sure to speak with other CEOs whose companies had been acquired by the same firm. Their feedback played a crucial role in his decision-making process.
“What meant the most to me was talking to the other CEOs who had sold to ARC Health,” Rosenthal explained. “And they said, ‘It’s not perfect, but we’re actually really happy that it sold.’ That’s the kind of insight that really helped me.”
The Highs and Lows of the Behavioral Health Company Sale Process
Selling a behavioral health company is, without question, an emotional rollercoaster. Rosenthal admitted that the process of selling his company was “probably one of the most stressful things I ever did.” He described it as “full of emotional peaks and valleys,” similar to the experience of taking a psychedelic drug—something that can’t truly be understood unless you go through it yourself.
Despite the stress, the sale of Manhattan Psychology Group to ARC Health was completed relatively quickly, with the transaction taking just 60 days from the initial letter of interest to the deal’s close. But speed doesn’t always mean ease. The process is filled with emotional hurdles, logistical challenges, and tough decisions.
This is where the importance of having a competitive process comes in. Kevin Taggart, an expert in mergers and acquisitions, stressed that sellers should always strive to create competition among potential buyers. While it may seem easier to form a personal connection with one buyer, doing so could ultimately cost the seller a significant amount of money. Creating a competitive bidding process ensures that sellers are getting the best deal possible, both financially and in terms of long-term compatibility.
“It is most likely going to cost you money if you don’t have multiple buyers in the process,” Taggart said. He further emphasized that it’s his job as an advisor to help sellers take a long-term view, thinking beyond the initial sale and considering the future impacts of the transaction on the company and its employees.
Planning for the Future: Building with an Exit in Mind
For Himelstein, whose company, Family Spring, is only five years old, the idea of selling the business is not on the horizon just yet—but he’s already planning for the future. Himelstein sees the potential sale as an opportunity to improve resources for the care of his patients and enhance the operational aspects of his business. He is building with the exit in mind, understanding that preparing for a potential sale today can help develop better systems, processes, and standards in the future.
“We’re building with the exit in mind,” Himelstein explained, “because we know that’s going to help kind of develop our standard operating procedures.” This proactive mindset not only sets the company up for a successful exit down the line but also ensures that the business continues to run smoothly and effectively in the interim.
However, Himelstein isn’t just concerned with financial figures when it comes time to sell. He emphasized that he would want to find a buyer who understands and shares his passion for psychotherapy. “There does need to be some type of energetic fit,” he said, highlighting that the buyer’s respect for the company’s mission and values is just as important as the bottom line.
The Long-Term Impact: Finding the Right Fit in a Behavioral Health Company Sale
A year after selling Manhattan Psychology Group, Rosenthal expressed satisfaction with his decision to sell and take rollover equity in the process. Looking back, he feels supported by ARC Health, and the relationship has helped him transition into a new chapter of his career. “I like to say ARC Health is our parent, and all these other practices [that ARC Health also acquired] are my siblings now,” Rosenthal said. He feels a sense of belonging within the broader ARC Health family and is content with the path he took.
In the end, selling a behavioral health company is about much more than just getting the highest bid. It’s about finding a buyer who shares your values, supports your mission, and respects the work you’ve put into building your company. The process is emotional, complex, and often stressful, but by keeping a long-term view and focusing on relationships, sellers can ensure that the transaction is not only financially rewarding but also personally fulfilling.
Key Takeaways
When considering selling a behavioral health company, it’s crucial to look beyond the financials and focus on the relationship with the potential buyer. Ensuring a cultural fit, finding a buyer who respects your mission, and preparing for the future can make the difference between a smooth, successful sale and a difficult, stressful one. With careful planning, the right mindset, and the guidance of experienced advisors, the sale of a behavioral health company can be a rewarding experience that sets both the seller and the company on a path to continued success.
