It’s July 29. . . Will Park Lawn Corporation be going private? What does that mean for Homesteaders Life?

July 29, 2024/Finance, Preneed/

It suprised many in the Death Care community when this press release came out late on Monday, June 3, announcing that a new company, made up of preneed provider Homesteaders Life and private equity firm Birch Hill Equity Partners, would be seeking to acquire publicly-operated funeral home and cemetery business Park Lawn Corporation.

It was also announced that a rather rapidly-timed shareholder vote would take place on July 29,2024, to make the proposal binding. If that vote comes in today in the affirmative it would, in my view, move that transfer of ownership one step closer to closing.

One of the questions about this development that is interesting is wondering how will the direct ownership of a large operating funeral home and cemetery company by a preneed provider affect the preneed provider’s relationships with its existing funeral home and cemetery clients as the business moves forward.

That’s what Homesteader’s Life will eventually find out.

Tom Anderson
Funeral Director Daily

There is no doubt that building a company that can diversify itself into more than one operating segment to bring in profits to the parent company is standard operating procedure and, generally, good business practice. But, there is also a historic independence, and potential reluctance, among family-owned funeral homes to purchase or affiliate with companies that compete against them in some business segments.

At one time, Service Corporation International (SCI) was involved with their own casket company and funeral services supply company under the SCI corporate umbrella. From my recollection, SCI found it difficult to sell their products to independent funeral homes that were competing with them in the funeral services business and in 1990, according to this information from the York Group, sold both their casket distribution business and their supply division to get back to the basics of providing funeral, cremation, and cemetery services.

In my opinion, that will be the trick for Homesteaders Life moving forward. The investment in Park Lawn Corporation should be able to bring in additional income to the company and increase the earnings for the money they hold at present – which could theoretically increase preneed policy yields — . . . . but being able to do that without yielding market share to other preneed companies to independent funeral homes that compete with them in the Park Lawn Corporation funeral home and cemetery footprint will be will be the battle they will fight.

On the other hand, the positive aspect about this transaction for Homesteaders Life is that you would assume that they are in a position to pick up the preneed business affiliations with the 250 funeral homes and cemeteries that Park Lawn Corporation controls, if they don’t already do business with them at this time.

Many preneed companies, such as Funeral Directors Life and Homesteaders Life have divisions that help with funeral home acquisition and operational financing. However, those divisions compete with banks and other financial services companies and not directly with independent funeral homes.

I think this investment by Homesteaders Life is a little different and time will tell how it plays out with Homesteaders independent funeral home clientele.

Here is where you can find information on Homesteaders Life funeral home lending program (2022 article)

Here is where you can find information on Directors Business Solutions (an affiliated company of Funeral Directors Life) and their lending program.

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