Mindful Investments: The Buy-In and Build-Up of Mental Health Resilience

In recent years, the global landscape has been marked by a series of significant (if not unprecedented) challenges, ranging from the Covid-19 pandemic to the cost-of-living crisis and now the deteriorating geopolitical situation. Undoubtedly, these events have had a profound impact on public mental health, which is evident in the striking statistic that each year one in four people in the UK will suffer from some sort of mental health condition1. The evolving narrative around mental health is gaining prominence in the media, with several high-profile athletes, including gymnast Simone Biles, tennis champion Naomi Osaka, English cricketer Ben Stokes and English rugby player Owen Farrell, taking breaks from their careers to prioritise their mental wellbeing. In tandem, businesses are acknowledging the broader implications of compromised mental health on economic outcomes and workplace dynamics and are starting to understand that employee wellbeing is not only a moral imperative but also a strategic advantage. Unsurprisingly, the growing interest in workplace wellbeing solutions has not gone unnoticed by investors.

A New Era for Mental Health

We are undergoing a gradual, yet consistent transformation, redefining the notion of ‘health’ beyond physical wellbeing towards a state that encompasses mental, social, emotional, spiritual and financial health2. Corporations are coming to understand that fostering a culture of mental wellbeing and holistic wellness, not just physical health, not only supports their workforce’s individual needs but also yields tangible benefits in terms of improved productivity, employee satisfaction, and overall performance. A clear indication of this rising consciousness is the c.£630m corporate wellness market, which includes a c.£160m segment delivering education, counselling and advisory services (IBISWorld, 2024).

This transformation, steering away from erstwhile prevalent toxic cultures rife with stress and burnout, raises the question: what’s driving this change?

A series of events has exacerbated the population’s already declining mental health, starting with Covid-19, the cost-of-living crisis, and now an increase in geopolitical tension. The latest figures revealed by the HSE show that depression and anxiety showed signs of increasing in the years prior to the coronavirus pandemic, yet the disruption Covid-19 has brought has been a major contributory factor to the upward trend. Statistics show that 72% of the population experienced more stress than usual during Covid-193, fuelled by concerns for their personal wellbeing and that of their loved ones, as well as by increasing feelings of job insecurity and prolonged work hours due to the blurring of boundaries between work and home. Deloitte’s recent study showed that employees are recording more instances of work-related stress, depression and anxiety each year, with these reasons accounting for the majority of days lost due to work-related ill-health4. For example, in 2022/23, each person suffering took around 19.6 days off work, which is equivalent to the minimum required paid annual leave days in the EU. These trends are prompting employers to take note of the substantial costs associated with poor mental health, estimated at a staggering £56bn per annum in the UK. These costs encompass absenteeism (11%), employee turnover (40%), and presenteeism (49%). While these metrics vary by industry, the total cost of poor employee mental health as a proportion of average annual earnings is around 6%. To put this figure in perspective, this would equate to the lower bound of the average marketing spend for a company5!

Figure 1: Average Annual Cost of Poor Mental Health Per Employee

GBP | Cost as a Percentage of Average Annual Revenue; SOURCE: Deloitte – UK Mental Health and Employers, March 2022

Figure 2: Mental Health in the Workplace – Employee Journey & ROI

Illustrative; SOURCE: Fairgrove Research; Deloitte Mental Health Report, UK 2022

The extensive and complex mental health support services market can be segmented by ‘areas of intervention’, ranging from preventative and proactive measures to reactive responses to mental health conditions. Whilst the competitive landscape is evolving, shaped by mergers and acquisitions, wellbeing specialists typically focus on a particular stage in the ‘mental health value chain’. Currently, no single player has emerged as the dominant force across the entire value chain to become a one-stop shop solution.

Figure 3: The Mental Health Value Chain & Relative Capability

Illustrative & Approximate; SOURCE: Fairgrove Analysis

Preventative Stage: Cultivating Mental Wellbeing

The focus of the preventative stage is on minimizing the potential for mental health problems by tackling determinants before they manifest. This segment is predominantly comprised of education and advisory services. A variety of both free and premium resources exist for preventative interventions, from established online platforms that provide easily available educational resources, such as those offered by the mental health charity Mind and the NHS, along with podcasts like Radio Headspace and Happy Place.

There is an array of 20,000 free or low-cost mental health apps in the market6, including Calm and Headspace. Although research on the efficacy of mindfulness apps is still in its early stages, the well-designed apps that are used regularly hold substantial promise in delivering effective self-managed mental health interventions for conditions such as anxiety and depression7. The apps are popular as they play a critical role in bridging the treatment gap, exacerbated by limited access to services in certain regions and a global shortage of psychiatrists, evidenced through the 1.2 million people on the NHS waiting list for access to mental health services8. Such apps typically operate on a subscription basis, thus making them an attractive investment opportunity due to the recurring revenue streams. For example, the subscription-based meditation app Calm, valued at $2bn, raised more than $200m in venture capital funding from investors including Lightspeed Venture Partners and Goldman Sachs.

Proactive Stage: Nurturing Early Intervention

The proactive stage is dedicated to early intervention—identifying and addressing mental health symptoms before they escalate, either through self-care, or minor clinical interventions, often referred to as ‘informal community care’.

The self-care space was significantly enhanced by the emergence of mental health digital app specialists. This group includes providers like Thrive, SilverCloud Health and Unmind, and they typically offer self-guided online learning courses designed by psychologists and experts, and in some cases human-to-human support. Due to the increasing popularity of these apps in the workplace, these providers gained attention from venture capitalists. For example, Unmind was backed by $63m of venture capital funding with participation from EQT Ventures and Felix Capital, among others. Another provider, Talkspace, which is an online therapy app which provides D2C & B2B access to a network of certified professional clinicians, went public at a $1.4bn valuation in 2021. 

The key players in minor clinical interventions are Employee Assistance Programme (EAPs) service providers, such as Vivup, Health Assured, and PAM Life. EAPs intend to help employees deal with personal issues that may be affecting their work performance and wellbeing and typically include assessment, short-term counselling and referral services for more serious treatment. The standard offering for these providers is online and F2F therapy and counselling, yet a select few, including Vita Health and Health Assured, further extend their services to include web-based interventions (such as online self-help courses including computerised CBT) and online mental health screening services. These programmes are rapidly gaining traction amongst the business community, with 66% of employers providing access to an EAP according to a CIPD report.

Figure 4: Actions Taken to Manage Employee Mental Health at Work

Percentage of Respondents (2019, N=675; 2022, N=606); SOURCE: Fairgrove Research

Reactive Stage: Embracing Clinical Therapy and Hospitalisation

The reactive stage is the last stage in the mental health value chain, which includes major clinical therapy and hospitalisation. Employees can access these services through the NHS or private medical insurers, such as Aviva, Bupa and Axa Health. While the latter focus on insurance policies, many do provide employee benefits and have established mental health offerings, for example, via offering an EAP.

Figure 5: Mental Health & Wellness Market Landscape

Illustrative & Non-Exhaustive; SOURCE: Fairgrove Research

Mind Matters: Buying into the Future of Workplace Mental Health

Investors have shown a keen interest in the reactive and proactive workplace mental health space, driving M&A – often employing a strategic buy-and-build approach – to create a seamless customer journey across the mental health value chain.

The merger between Headspace and Ginger is the most prominent example of a deal which facilitated the combination of two parts of the value chain (preventative and proactive). A meditation and mindfulness app, Headspace, and Ginger, a teletherapy services provider which received $100m in funding from Blackstone, formed Headspace Health, which was recently valued at $3bn. Even after the merger, Headspace Health continues to grow through acquisition to further expand vertically and remain relevant in a competitive market. For example, it acquired Shine app, a leading platform for inclusive mental health and wellness support, and Sayana, an AI-powered mental health and wellness company.

LDC’s investment in PAM, one of the largest occupational health and wellbeing providers in the UK which offers EAP, is another recent example of a buy-and-build strategy. Post-investment, PAM continued its expansion with the acquisition of three businesses, such as a physiotherapy business of Connect Health, mobile health screening provider MedProtect, and Corporate Health Ireland, which provides consultant-led occupational health services. Another example is BGF-backed occupational health provider Medigold, which acquired Health Management in 2023, a UK-based workforce health and wellbeing provider that offers primary care and treatment pathways for employees, amongst other occupational health services.

Figure 6: Selected Transactions in the Mental Health Sector (* indicates deals that Fairgrove advised on)

TargetDescriptionAcquirer (PE-Backer)Date of Investment
7MindDigital mental wellbeing platform that offers mindfulness and meditation content7NXT (Oakley Capital portfolio company)December 2023
Plumm HealthProvider of mental health and people management support to businessesIW CapitalNovember 2023
My Online TherapyVirtual psychology and counselling services appAscenti (bd-capital portfolio company)August 2023
HelloSelfDigital therapy platformOctopus VenturesMarch 2023
KoothYouth digital mental health platformBGFJanuary 2023
Vivup*Wellbeing and employee benefits providerOmni PartnersJuly 2022
Frog Systems*Wellbeing streaming serviceAldridge CapitalNovember 2021
Non-Exhaustive; SOURCE: Fairgrove Research

Nice-to-have, or a business essential?

In the post-pandemic era, wellbeing has ascended as a priority among business leaders. The counterargument is that spending on employee wellbeing might be reduced due to the current macroeconomic climate and budget constraints. However, heightened awareness of the importance of workplace mental health makes such investments more justifiable than before. This paradigm shift in workplace culture now acknowledges wellbeing as a strategic asset rather than just a perk, reinforcing the case against spending cuts. Investing in mental health not only mitigates the tangible costs associated with poor mental health but also fosters a resilient, adaptable, and high-performing workforce.

Our Experience

For organisations seeking to navigate the evolving landscape of mental health in business, Fairgrove offers strategic expertise and deep industry knowledge. Our experience in commercial due diligence and growth strategy positions us uniquely to assist your business in making informed decisions in this sector. If you’re looking to understand the dynamics of the mental health market and its impact on your strategy, please reach out Patrick Woodrow or Daria Smirnova.

1 YouGov: ‘One in five Britons have sought help with their mental health’, 2022

2 Deloitte: ‘Future of Health’, 2023

3 Mintel: ‘UK Managing Stress and Wellbeing’, 2021

4 Deloitte: ‘Mental Health and Employers. The Case for Investment – Pandemic and Beyond’, 2022

5 Gartner: ‘What marketing budgets look like in 2022’, 2022

6 Deloitte: ‘Mental health goes mobile’, 2022

7 MHealth: ‘Do mental health mobile apps work: evidence and recommendations for designing high-efficacy mental health mobile apps’, 2018

8 Independent: ‘NHS fails on mental health care targets as waiting list rises to 1.2 million’, 2022

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