Strength in Numbers: How Funeral Consolidation Works

With the upcoming wave of retirements from Baby Boomers and Generation X, the funeral profession will likely see a major change in ownership from the estimated 50% of funeral home owners in the US who plan to retire in the next five years.

This surge in retirees might raise some questions like “Who are these buyers?”, “Why do they want to acquire my funeral home?” and “Are they getting the better end of this deal?”. To help answer these questions, we are writing a two-part series, with the first being below:

• Part One: Why Consolidators Buy Independent Funeral Homes
• Part Two: How Both Sides Can Win in a Sale to a Consolidator (Coming Next Week)

Part One: Why Consolidators Buy Independent Funeral Homes

From our position as a leading funeral home mergers and acquisition advisor, many independent funeral home sales go to nationwide and regional consolidation groups such as Service Corporation International, Carriage Services, and Rollings Funeral Service. By operating multiple funeral homes, these companies can access advantages unavailable to an independent funeral home owner.

Our job as your advisor is to understand how these groups operate their businesses. Then, we present your business to the best buyer who relies on any of the advantages below to create additional value for your business.

The Advantages of Large Consolidators

1. Sharing of Resources in a Local Group

One of the primary benefits of a consolidation group is the ability to share resources across multiple funeral homes within the same region. In these regions, funeral homes share things like crematories, vehicles, and even staff, keeping variable costs to a minimum among the locations. They often achieve this through a “Hub and Spoke” strategy where a consolidator will purchase one large funeral home in a region with the goal of acquiring other businesses around it. With this strategy, the large business will act as the “hub” and often house the crematory, extra vehicles, a care center, and personnel to provide support for the “spoke” locations in the region.  

2. Vendor Buying Power

Another great advantage available to multi-location groups is their buying power with vendors. Large funeral home groups have stronger relationships with suppliers, allowing them to negotiate more favorable bulk pricing on caskets, urns, and other essential products. These cost savings contribute to improved cashflows without changing the quality of service.  

3. Improved Pre-Need Sales

One of the starkest differences between consolidators and independent owners is the importance placed on pre-need sales, having more favorable commission schedules, and the ability to have people focused solely on helping the agents succeed. With access to sophisticated marketing strategies and sales training, these organizations can increase pre-need revenue and expand the market share of their businesses while securing future market share at today’s burial rates.

4. Recruiting Pipelines

As the funeral industry faces an aging workforce, recruiting new entrants is becoming a significant challenge for many owners. The consolidation groups are facing this as well, which is why many of them have focused on building recruiting pipelines through scholarships, mentorship training, and leadership programs. These programs ease the burden of recruiting new staff for a funeral home and create opportunities for existing staff to move into leadership positions in the company.

5. Streamlined Systems and Specialized Expertise

Consolidators bring well-established payroll, HR, accounting, and operational systems that streamline back-office functions. With these improvements, funeral staff are more available to focus on serving families. Additionally, they often employ specialists in key areas like fleet management, legal, community outreach, and social media marketing, helping funeral homes strengthen their presence in the local market while allowing the staff to focus on the families.

6. Business Stability and Financial Security

Unlike independently owned funeral homes, which rely heavily on a single owner’s financial health and decisions, corporate consolidators benefit from a portfolio of businesses in different markets. This diversification allows the larger groups to withstand the natural ebbs and flows of individual markets that everyone in the funeral service is familiar with. 

What does this mean for my business?

Stay tuned for Part Two, “How Both Sides Can Win in a Sale to a Consolidator,” where we’ll discuss how you can use these advantages to benefit you and your staff before and after a sale.  

Transition Planning with NewBridge

NewBridge Group will work with you and a prospective buyer to develop a comprehensive transition plan that outlines the timeline, responsibilities, and milestones for the transfer of ownership. Clear communication and collaboration between the seller and buyer are essential to ensure a seamless transition and minimize disruptions to business operations.

Preparing your funeral home for sale requires careful planning, expertise, and collaboration with experienced professionals like NewBridge Group. With our industry knowledge and specialized services, we can help you navigate the complexities of selling your funeral home and achieve a successful outcome. We believe we know all of the active national and regional funeral home buyers (public and private) in the market today. Contact Alex Little at 678-571-0828 today to learn more about how we can assist you in preparing your funeral home for sale.