PE healthcare rollups have a seven-year itch they can't scratch

PE healthcare rollups have a seven-year itch they can't scratch

Thu, August 20, 2026 at 10:02 PM GMT+3 2 min read

Seven years into a private equity marriage, most partners want out. In healthcare rollups, investors are finding their companies have become too big for strategics, too rich for public markets, and too politically fraught.

In PitchBook's latest Healthcare Services Report, we count 35 businesses in the dental sector that have been held for seven or more years, and 29 businesses in each the mental health and musculoskeletal services sectors with that holding time. While only 16 companies in the veterinary sector have been held for seven years or more, 50 have been held for five to seven years.

These were once among the most popular sectors for PE firms employing rollup strategies, acquiring an established player and turning it into a regional or national champion using add-on acquisitions.

Executing rollups is hard. Some end up looking like a mish-mash of brands, technology and cultures rather than a coherent whole. Even solid businesses struggle to find a buyer once they grow beyond a certain size. Strategic buyers, the group that many PE firms have in mind when they embark on rollups, can afford to be picky.

"The relative supply of veterinarian and healthcare companies is abundant, with a limited number of firms that are interested in those spaces at that scale needed for the next turn," said Cory Markling, partner and private equity deal services leader at business advisory firm EisnerAmper. The problem isn't limited to these sectors, he added.

High valuations in the private markets make an initial public offering a tricky path to exit, as does a lack of comparable listed companies to benchmark valuations against, added Brian Wright, lead healthcare research analyst at PitchBook.

"[PE firms] have to make a compelling organic growth case for it to work. Public markets will be very skeptical," he said.

Regulatory and legal scrutiny could also be contributing to delayed exits. States including Washington, Oregon and California have enacted laws to limit the involvement of PE firms in healthcare. And the Federal Trade Commission is looking closely at how rollups affect the competitive dynamics of the sectors they operate in, added David Davidson, a healthcare law specialist at Dickinson Wright.

"They are looking at the buyer's entire acquisition history and strategy," he said.

Underpinning everything is the same gap between buyers' and sellers' expectations that has hindered all sponsor-backed transaction activity since 2022. Buyers want lower valuations to reflect today's higher cost of debt, while sellers cling to their marks.

"There are platform investments in our portfolio marked at 2x, 2.4x, 3x, and the manager says they want to hold on," said a primary and secondary investor with a mid-sized alternative investment firm in New York. "We wish they would just sell [even at a lower valuation]."

This article originally appeared on PitchBook News