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 advised 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,” 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 consider the following 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 publicly 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 understand who the buyers are and what they are looking for.  In general, we’ve seen that 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 and decide if the timing is right.

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 buyer’s 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.  Knowing how the whole market has performed is helpful even if your numbers have dropped. 

Have a Good Handle on Your Trends 

Buyers also prefer that sellers 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 your call volume per location and 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 also good to know the local real estate value trends, 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 have 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 critical 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 essential 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 is also beneficial (NewBridge can assist with the percentage of revenue benchmarks for each of these line items.  Many buyers like to see these within a particular range).  A good financial software product is well worth the expense, especially as you move closer to 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 attorneys, CPAs, or financial advisors as well. An experienced funeral home broker/succession planner, like The NewBridge Group, is critical in this case.  Having a representative/agent working with you not only allows you to maximize value in a sale but also allows you to identify the “right fit” buyer.  NewBridge believes we know all of the active funeral home buyers in the 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 altogether.  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 potential buyers to you before contacting any of them.  We prepare a “Confidential Information Memorandum” only sent to interested buyers who execute a Confidentiality Agreement based on the initial “teaser.”  We obtain multiple preliminary offers and then schedule on-site meetings for buyers, typically within a few days of one another.  This delicate process requires confidentiality; sometimes, it requires 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 has a different culture, 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 retirement goals.  Again, working with an experienced advisor can significantly 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: email todd@newbridgegroup.com or call 404-542-9956.

Todd Reich is a 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 achieve one of the most important transactions of their careers. He has also worked in mergers and acquisitions for over 25 years.