Q2 2024 Substance Use Disorder Update

Q2 2024 Substance Use Disorder Update

Deal flow within the substance use disorder (SUD) sector continued its sluggish pace throughout Q2 as the market only saw the completion of four deals. Investor appetite to utilize M&A as a primary growth strategy has waned in 2024 as lending markets and regulatory changes have made deal-making more difficult to execute. Furthermore, the FTC increased review on healthcare deals, due to anti-trust concerns, giving pause to investors across the healthcare ecosystem. Similarly, the Federal Reserve continued its conservative approach to monetary policy has made sourcing debt capital more expensive, leading to lower valuations and longer deal processes.

As private equity investment has slowed in the space, venture capital and growth equity investment has risen. Venture-focused firms are making minority investments in businesses that they believe are highly scalable, looking to take advantage of macro-level tailwinds that persist in the SUD space. This investment approach does not require the same regulatory approval or the amount of capital that traditional private equity buyouts require, making deal execution easier. Provident anticipates seller and buyer valuation expectations to converge over the coming year, leading to increased deal flow.

To print and download the full Substance Use Disorder Update report, please click below…

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