Nystrom & Associates Ltd. Acquires Ellie Mental Health’s Minnesota Assets in Strategic Deal
In a strategic move to pursue different growth paths in outpatient mental health, Nystrom & Associates Ltd. has acquired the Minnesota assets of Ellie Mental Health. This acquisition comes after a multi-year pause in M&A activities for Nystrom & Associates, allowing the organization to invest in infrastructure and organic growth opportunities. On the other hand, Ellie Mental Health sought to focus solely on expanding its franchise model for mental health clinics. By joining forces, both organizations found willing business partners with similar backgrounds, cultural priorities, and supportive private equity investors.
The deal, which was reported by Behavioral Health Business in May and finalized in August, saw Ellie Mental Health selling its Minnesota clinics to Nystrom & Associates. According to Ellie Mental Health CEO Michael DiMarco, the decision to divest this part of the business was driven by a desire to align with the company’s strategic direction and operational competencies. With a focus on expanding its franchise locations, Ellie Mental Health found that maintaining company-run clinics in addition to franchises was challenging, especially when they were not of equal scale.
Prior to DiMarco assuming the CEO role in January, Ellie Mental Health had already begun its growth through franchising in August 2021. The company also secured private equity backing from Princeton Equity, a firm specializing in franchise businesses. This strategic pivot was aimed at staying true to their franchise model of investing, as DiMarco explained.
The acquisition was facilitated by the support of private equity backers on both sides of the deal. Nystrom & Associates, backed by Nautic Partners, found valuable insights, resources, and relationships that expedited the process. The geographical proximity of both organizations, headquartered in Minnesota, also played a role in the successful completion of the deal. With the acquisition, Nystrom & Associates now operates 84 locations across Minnesota, Iowa, North Dakota, Missouri, and Wisconsin.
Moving forward, Nystrom & Associates plans to focus on integration following the acquisition. While further M&A activity is not imminent, CEO Mark Peterson expressed the organization’s readiness to explore growth opportunities as they arise. Meanwhile, Ellie Mental Health is set to build a team of in-house clinical experts to develop clinical standards and support innovations by franchisees. With the sale of company-owned clinics, the focus will be on evaluating payer reimbursement rates, developing alternative services, and tracking outcomes to enhance patient care.
In conclusion, the acquisition of Ellie Mental Health’s Minnesota assets by Nystrom & Associates marks a strategic move for both organizations to pursue their respective growth trajectories in the outpatient mental health space. With a shared commitment to quality care and operational excellence, this deal sets the stage for future expansion and innovation in the mental health industry.
