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Cerberus Capital Management has agreed to buy Lighthouse Autism Center from Abry Partners for a reported value of more than $400 million, according to PE Hub. In reporting the news, the publication cited four sources with knowledge of the deal, which it said is nearing completion.

Based near South Bend, Indiana, Lighthouse provides center-based applied behavioral analysis (ABA) therapy to children ages 2 to 18 out of more than 20 centers across Indiana and Michigan. The ABA provider was founded in 2012, and it first scored a strategic investment from Boston-based Abry back in 2018.

The transaction is especially notable given the lack of platform deals in the autism treatment industry as of late. The most recent came back in early 2020, when KKR’s Blue Sprig Pediatrics bought Florida Autism Deal in a transaction valued at $120 million. Around the same time, General Atlantic also invested in ACES.

As such, in 2020, autism platform formations dropped to their lowest level since 2016, according to Dexter Braff, president of the M&A advisory firm The Braff Group.

“That’s a significant issue and an area of some concern for us as relates to the overall health of the market,” Braff said back in April during the 2021 virtual Autism Investor Summit. “It’s those platform formations that support the ongoing activity over a prolonged period of time. … They are a leading indicator of what you might see over the next three or four or five years.”

At the time, he characterized a platform-sized autism company as one that brings in “anywhere north of $10 to $15 million in revenues,” meaning Lighthouse more than fits the bill.

Reports of the Lighthouse transaction come after autism deals overall dipped in the second quarter of 2021. There were just six autism transactions in Q2, as opposed to 11 in Q1, according to the healthcare mergers & acquisitions firm Mertz Taggart.

Kevin Taggart, the firm’s managing partner, attributed the dip in part to cost economics.

“Many private equity groups that have a platform company have decided to go the de novo route rather than to acquire a small provider for what have been high multiples,” Taggart said. “They can do it more cost effectively and have a waiting list shortly after they open.”

That logic makes sense when one considers the “out of control” multiples the autism market has seen in recent years. Dan Davidson, managing director at the investment bank Coker Capital Advisors, discussed the sky-high valuation trend back in November 2019.

“In autism, [multiples are] upwards of 20x in some cases,” Davidson said at the time. “But even small $1 million EBITA providers are getting north of 10x — and sometimes even well above that.”

These days, valuations remain high, according to Braff. In April, he said some buyers are still offering up to 14x or 15x EBITDA. As a result, Braff predicted the space will likely see more platform deals as follow-ons, rather than initial transactions.

“What you wind up sometimes seeing are consolidators then looking to buy companies that previously would have only been bought as an initial platform,” he said in April. “Sometimes the valuations aren’t as high. Acquisition of a platform as a platform carries extra value because the buyer needs it to get an infrastructure in order to build on top of it.”

While that could prove true in the future, Cerberus doesn’t fit that narrative. It is a new entrant to the autism market, and in acquiring Lighthouse it will join the 35-plus PE groups to enter the space over the past four years or so.

For this story, Behavioral Health Business reached out to Cerberus, Abry and Lighthouse. It had not yet heard back from any of those companies at the time of publication.