“Come Together”: Mergers, bolt-ons, work for family firms too

 

 

Funeral Director Daily does a good job of notifying our readers when the large corporate companies acquire new funeral homes.  It appears that these transacations are a consistent regular occurrence, although there are some ebbs and flows to the pipeline of deals.  We also know that large corporate consolidators and their purchases are not the only place that acquisitions and mergers are taking place in the funeral home space.

 

When I peruse the internet for articles that would interest Funeral Director Daily readers I notice mergers, acquisitions, and bolt-on purchases for hub and spoke firms happening often.  There is a lot of that happening around the United States in our profession.  It is just not something that we bring to our readers every day because the interest in the individual transactions is truly local and maybe regional in scope, but not national news in our profession.

 

What is “National” in scope about these transactions is that they are happening.  It’s been said for a long time in our business that there will be a large amount of funeral home owners wanting to retire with no family interested in following in their footsteps as the world of funeral home ownership changes.. . . . . . .From what I read and hear, I think that time is upon us.

 

Here are a couple of articles that I recently came upon that show some of the different types of transactions that are going on. . .

 

Funeral Director Daily take:  Charles Dickens wrote his classic “A Tale of Two Cities” in 1859. . . that’s a long time ago.  However, I think about that story when I read about funeral homes being bought and sold.  You see, I think the “Tale or story of your funeral home” might be the deciding factor in who will acquire it if you decide to sell and retire.

 

Tom Anderson
Funeral Director Daily

What matters to the different potential buyers is if you are located in a metropolitan city, or a suburban city, or a growing regional center. . . . or are you in a small isolated community with not much growth potential?  Wherever your funeral home is located the case can be made that when put it up for sale you will, more than likely be a target for some company. . . . but the tale, or story, of your funeral home will determine who that company is.

 

Metropolitan, suburban and regional center funeral homes in growing areas probably have great value and bring in multiple offers, but a single funeral home in a one fuenral home community that is holding its own with population stability will, more than likely, have some value to a neighboring community funeral home as well.

 

It appears to me that the companies that operate as “multiple funeral home” owners are continuously looking for more locations to ramp their economies of scale.  Every owner wants, for eonomies of scale, to have a situation where their case load per director is growing. . . And, I think as preneed sales become increasingly more important to funeral homes that will move firms to grow even faster to ramp up their numbers.

 

However, on the other hand, I’ve noticed some operators stop acquisitions for acquisitions sake. . . .These type of operators are making sure that each and every location that they purchase can carry profitability on its own.  That’s important too. . . especially as fixed costs are rising and one does not want to get caught with a business with high fixed-costs where the average retail sale is going down — especially if the business is not adding volume.

 

Anyway, I’m seeing businesses change hands.  And, the transactions are probably more complicated than they were ten years ago.   What’s at stake — especially if one makes a purchase mistake — is also larger and could be business and life altering if going-forward assumptions are wrong.  If I was looking to buy or sell I’d make sure that I had an expert such as Johnson Consulting Group in my corner.  They should be your first call when looking to expand or retire.

 

More news from the world of Death Care:

 

Enter your e-mail below to join the 3,111 others who receive Funeral Director Daily articles daily:


“A servant’s attitude guided by Christ leads to a significant life”

Posted in ,

Funeral Director Daily

Leave a Comment




[mc4wp_form id=9607]
advertise here banner