How to MITIGATE RISKS When Choosing A FUNERAL HOME BUYER

2025 is shaping up to be an active year for funeral home
transactions. The NewBridge Group has been advising family
owned, private funeral home owners on their succession
plans for over twenty five years. As you may have noticed in
our recent article “Five Reasons Why 2025 is The Year to Sell
Your Funeral Home” (www.newbridgegroup.com/blog/fivereasons-
why-2025-is-the-year-to-sell-your-funeral-home/),
we are forecasting 2025 to be a busy year for private funeral
home sellers. We believe it’s easier to stand out in a void vs.
a crowd, so if you are thinking of a sale, it may be prudent to
move sooner vs. waiting until things get busy.
However, it’s also wise to keep the following in mind when
choosing a buyer.
• Know what buyers are looking for
• Know how you stack up against your competition
• Have a good handle on your trends
• Have your financials in order
• Work with an experienced advisor
• Interview multiple buyers
• Understand your post-transaction goals
KNOW WHAT BUYERS ARE LOOKING FOR
There are multiple types of funeral home buyers in
today’s market. From the public traded firms, such as SCI
and Carriage, to the large regional buyers like Park Lawn,
and to the smaller regional and even local firms, it’s good to
make sure you understand who the buyers are and what they
are looking for. In general, we’ve seen most buyers typically
want to see at least 150 calls and around $1,000,000 in real
revenue (after cash advance expense is netted against cash
advance revenue), before making an offer. However, if you are
close to an existing location of a buyer, many will consider
smaller opportunities. Knowing what buyers are looking for before starting negotiations can help you decide how to best
position for a sale, as well as decide if the timing is ripe.

KNOW HOW YOU STACK UP
Having a strong understanding of your competition is
helpful for buyers to know. Some buyers may have a strong
understanding of your local market. However, many do not.
If you are going to market without a good idea of your call
volume trends (direct cremation vs. full service cremation vs.
traditional, etc), it can taint a buyers perspective of your firm.
NewBridge can assist in analyzing market trends. These days,
many funeral homes are not posting all obituaries online, so
counting obits is not always accurate. Even if your numbers
have dropped, knowing how the whole market has performed
is helpful.

HAVE A GOOD HANDLE ON YOUR TRENDS
Buyers also prefer sellers to have a good handle on their
growth trends. It’s always nice to position for a sale when you
are trending upwards, however, that is not always possible.
Having a good understanding of not only your call volume per
location, but also your revenue per location is quite helpful.
Sometimes it might make sense for a buyer to acquire a portion
of your locations and consider closing others. It’s good to
know the local real estate value trends as well, as a buyer may
sometimes consider allowing you to keep a location and leasing
to them. *NewBridge always tries to sell all locations and
all real estate, however, it’s helpful to know this information
just in case. Population trends, and new business openings
and closings are also key to keep an eye on.

HAVE YOUR FINANCIALS IN ORDER
This is one of the most important risks to understand. If
you do not know your annual revenue (Gross Sales, Gross
Receipts), it can be a red flag for a buyer. Having your annual
revenue on hand will show buyers you’re prepared and know
your standing in the marketplace. Even if your CPA handles
this, or another family member or staff member, it’s important
for the owner to also know these numbers and review
them on a consistent basis (if not daily, weekly, or monthly).
Knowing the details of your Cash Advance items, salaries
(typically the largest expense item), and advertising, are also
beneficial (NewBridge can assist with percentage of revenue
benchmarks for each of these line items. Many buyers like to
see these with in a particular range). Having a good financial
software product is well worth the expense, especially as you
move closer towards a sale.

WORK WITH AN EXPERIENCED ADVISOR
One of the best ways to mitigate risks when choosing a buyer
is to have an advisor. Advisors can be an attorney, CPA, and
financial advisor as well. In this case, an experienced funeral
home broker/succession planner, like The NewBridge Group, is
critical. Having a representative/agent working with you, not
only allows you to maximize value in a sale, it also allows you
to identify the “right fit” buyer. NewBridge believes we know
all of the active funeral home buyers in market today, along with the appropriate contacts at each firm. We have a robust
database of their geographic preferences, minimize size focus,
as well as data on how much money they are looking to invest
in many cases. Many private equity backed firms are looking
to put a certain amount of money “to work” and have a limited
time frame. This can be helpful to know, but also risky for the
longevity of your funeral home’s legacy and staff. Unfortunately,
we have seen many funeral homes (private equity backed or
not), grow too quickly and overpay using too much debt. This
unfortunately has given some sellers unrealistic value expectations
while also causing a handful of buyers to pause buying
or pull out of the marketplace all together. Knowing who these
groups are is valuable.

INTERVIEW MULTIPLE BUYERS
Working with an experienced advisor like NewBridge
Group, allows you to run a custom, “auction-style” process.
NewBridge will present all of the potential buyers to you
before contacting any of them. We prepare a “Confidential
Information Memorandum” that is only sent to interested
buyers who first execute a Confidentiality Agreement based
on the initial “teaser”. We obtain multiple preliminary offers
and then schedule on-site meetings for buyers, typically with
a few days of one another. This is a delicate process that requires
confidentiality and sometimes working with limited
staff and possibly after hours. NewBridge is happy to have a
no-obligation conversation with any prospective owner who
wants to learn more. Asking for references is also important
and something an advisor can lead.

UNDERSTAND POST TRANSACTION GOALS
Understanding what you want to do after a sale is also
a good way to mitigate the risk of choosing a buyer. Most
buyers prefer owners remain on board through a transition
period, however each have different cultures and some may
even be able to share staff from a nearby rooftop. Each buyer
has different expectations/requirements, but most are flexible
with your goals for retirement. Again, working with an
experienced advisor can greatly mitigate your chances of
choosing the “wrong buyer”.
The NewBridge Group would be honored to have a casual
conversation about your goals and can even provide you with
high level thoughts on value.
Feel free to reach out to me directly any time:
todd@newbridgegroup.com or 404-542-9956 mobile.

Todd Reich is Managing Partner with The
NewBridge Group, a succession planning
advisor exclusively to the funeral service
industry. He has worked with numerous
family owned funeral homes helping them
to achieve one of the most important
transactions of their careers. He has
worked in mergers & acquisitions for over
25 years.