DEAL MARKET: Treatment M&A Slows to Crawl, Buyers and Sellers Circle

05/15/2009 - ATIN - The addiction treatment industry mergers and acquisitions market has slowed to a crawl in recent months as the deepest recession to hit the nation since the Great Depression takes hold.

Industry M&A players say that there is plenty of talk going on between potential buyers and sellers - for example, CRC Health Corp, the nation's most active acquirer of treatment centers, is rumored to be courting Visions treatment center in California to compliment its existing Echo private pay adolescent treatment operation in the Malibu area.

But the mergers and acquisitions talk seems to be getting nowhere because the two sides seems to be far away on the always critical issue of pricing.

"Because of the recession, revenues at many centers have fallen and that has made buyers reluctant to step up and pay the kind of mulitples that existed in the marketplace a couple of years ago, they are afraid of overpaying," said one highly active treatment industry M&A player. "Buyers don't want to hear that multiples may have fallen, they still want their price."

Thus the M&A dance continues, with many active negotiations as many buyer and sellers cicle, according to industry mergers players.

And perhaps the principals of South Florida's The Watershed - which is rumored to have much lower census figures this year, although those appear to have improved markedly recently, according to company sources - now may regret that they did not accept previous very high bids for the company, rumored to be in the $120 million range.

One example of the stalled deal market is the bidding activity around Seafield Center, a highly desirable for profit treatment property located in the tony Hamptons north of New York City on Long Island. A multi-facted treatment operation with about $20 million a year in annual revenues, Seafield has been actively marketed by its founder and owner, real estate developer George Benedict. All to no avail though, as rumored firm bids from players like Hazelden and CRC have evaporated.

Newswire Staff

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