Industry Acquisitions Continue to Follow Trends

I’m using Friday’s column to catch up with some things I’ve seen in the industry concerning acquisitions over the past 2-3 weeks.  It’s interesting but not surprising that we continue to see acquisitions in the industry over that time period.  In the last three weeks we have seen:

  1. Thacker Casket acquire Madison Casket Company.  According to the Press Release this will give Thacker an opening to funeral homes in Mississippi and Louisiana.  The release also notes that this is Thacker’s 6th acquisition in the industry and their 2nd within the last six months.
  2. Alleghany Capital has made an investment into Wilbert Funeral Services, Inc. in which they will purchase 45% of the company and control some of the Board of Director Seats. Here is the Press Release.
  3. Foundation Partners Group of Florida has purchased the Cremation Society of Minnesota and its related business, including the First Memorial Funeral Chapel, from the Waterston Family of Minnesota – one of the pioneers in cremation and a very big provider in the market of Minneapolis and St. Paul.  Here is that Press Release.

Funeral Director Daily take:  In my 35 plus years of funeral service I’ve really noticed that acquisition strategy by regional or national operators is a big part of the game.  I’ve even noticed that the strategy is used and can be very successful in what one may call the mini-market — where a business has no desire to be a regional player but are the “Best-fit” in the acquisition of a competitor and/or a neighboring facility.  In a high “fixed-cost” industry like the death care market adding ancillary business without adding great fixed cost can really add to the bottom line whether in the funeral home business or the merchandise supplier business.

It appears to me that the death care industry, in general, is going to have too many players as we move from an earth burial model to a cremation model and the revenues decline in accordance with that movement.  Consider we just saw the NFDA Burial and Cremation report that indicates over the next 20 years the number of caskets sold will decrease from about 1.25 million to 541,000 nationwide.  Some casket companies just won’t make it and those that do will probably have to have larger reach.  It just makes sense – since caskets are buried in vaults – that the vault industry will follow the same process.  In both cases, companies can now make the choice — do I get out now or do I stay and try to grow my market share. The decision made on that is how we get both buyers and sellers.

Funeral Homes have those same decisions to make and another thing that enters the conversation there – since so many are family operations – is the ability to pass on thru succession planning to the next generation.  If that next generation does not want to follow into the family business the decision is much easier — the big decision then becomes timing.

While the movement to cremation causes some anxiety among the funeral industry and what will happen, we are not the only industry where anxiety is taking place.  I spent two days this week with a friend of mine who is the CEO of one of America’s Top 50 public companies.  We visited about family grocery stores and what is happening in that industry with the Amazon/Whole Foods potential marriage and, interestingly enough, we also visited about the battery operated car industry causing a great deal of anxiety in the retail gasoline market. In fact, Minnesota’s largest two chains of retail gasoline outlets have both sold to larger players withing the past 6 months.  A sign of that anxiety?

So, it only is good strategy to first find out if you will soon become a buyer, seller, or just sit still.  Then you need to figure out the best timing on your part.  Finally, if you believe you are just sitting still — know what you will do if someone approaches you.  My guess — is that if you have a desirable property is that there is someone out there who may be in the buying mode and may approach you.[wpforms id=”436″ title=”true” description=”true”]

 

 

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