Thinking of an ownership transition? Here’s some straight-forward advice on getting started
Depending on who you listen to you will get some opinions that over the next decade more than 50% of today’s family-owned funeral establishments will change hands. Now, I don’t know if that is true, but there is a shifting demographic, not only in age, but in preferred geographic living locations, that will drive some change in funeral home ownership.
For instance, I can see smaller rural communities that have two funeral homes and a declining population have consolidation leading to only one funeral home. I can also envision large metropolitan areas where it is expensive to operate facilities, especially in a high cremation environment, having some of their funeral facilities close or consolidate.
In any regard, if you are a funeral home owner that may be thinking of making a transition out of the business in the next 3 to 7 years I would suggest the earlier that you get started with your planning, the better off you will be. Putting a plan in place may not only help one reap the best possible financial benefits, but it may allow for discussions with your preferred successor that could reap additional benefits for both of you.
To that end, I noticed a short article from the business planners and adivsors at Clifton Larson Allen (CLA) entitled “The 5 Critical Steps of Owner Transition”. You can read the article here.
In short, the experts at CLA suggest the following five steps for businesses thinking about a sale process. These items are not specific to the funeral home and cemetery profession, but in my opinion, good suggestions regardless.
- Establish your advisory team
- Determine what you want
- Determine what you have
- Make a plan to bridge the gap
- Execute your plan
Funeral Director Daily take: I sold my family-owned funeral home in 2013. It was probably about 2008 when I got serious about putting a plan together to transition out of ownership. I met with the experts at Johnson Consulting Group to get an idea of what I had in terms of a financial value for the funeral home as well as who they thought might be interested in our funeral home.
And, if you have a few years to go on like I did, you have the ability to plan out revenue increases and expense plans that should grow your EBITDA which is what will lead to an increased price. You also have the ability to put future leadership into place if your firm is one that might be looked at by a regional or national consolidator. . . . especially in today’s world the thought of continuity of personnel is sometimes not regarded as highly by the seller as it is neccesitated by the buyer. In my opinion, that continuity, if you have it set up, can bring a higher sales price.
From my point of view, you can probably sell your funeral home with a few phone calls in a weeks or months time. However, if the plan is to maximize your business into an amount of cash, then you need to do some planning first. The CLA article is a great place to get an idea on how to do that and then I would suggest putting a death care expert such as Johnson Consulting Group on that advisory team when you get started.
More news from the world of Death Care:
- Nick Douch “honored” to be new president of Bournemouth and District Association of Funeral Directors. Dorset Biz News (United Kingdom)\
- Top ten most expensive places to die in the U.S. KnowInsiders.com
- Florida Senate passes bill to establish program to find erased cemeteries. Tampz Bay Times (FL)
- Batesville HR chief honored by Indiana Chamber. Inside Indiana Business (IN)
- AM Best affirms credit ratings of Homesteaders Life Company. BusinessWire
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