Insights on Funeral Home Valuations
Whether you have immediate plans to sell your funeral home or not, a valuation can offer insight into your business’s health and growth potential. It not only establishes a baseline for your business’s worth but also aids in monitoring and steering its development.
Valuing a funeral home involves assessing its worth based on various financial, operational, and market-related factors specific to the funeral services industry. Here’s an outline of what goes into a funeral home valuation:
Financial Statements and Performance:
A review of the funeral home’s financial statements, including income statements, balance sheets, cash flow statements, and tax returns over a specific period, will help to evaluate its financial performance and stability.
Staff and Expertise
Labor costs significantly impact the business’s finances; an assessment of the staff’s experience, skills, and qualifications is performed to determine payroll levels in the absence of current ownership.
Client Base and Contracts:
Assessing the funeral home’s customer base, existing contracts, and pre-need contracts can help determine the potential for future revenue generation.
Location and Facilities:
The location of the funeral home, its accessibility, size, facilities, and condition can significantly impact the valuation.
Equipment and Inventory:
An evaluation of the equipment and inventory (e.g., caskets, urns, memorial products, embalming equipment) owned by the funeral home is considered for their depreciation and market value. This also includes an assessment of your record keeping software, for services, calls, preneeds, trusts, families served, accounting, etc.
Market Analysis:
The local and regional market conditions, competitive landscape, demographics, demand for funeral services, and growth trends in the funeral industry allow for a more accurate valuation.
Intangible Assets:
Brand reputation, community relationships, goodwill, and proprietary processes or methods can contribute to a funeral home’s value.
Ultimately, a valuation is more than just a number; it’s a tool to empower funeral home owners, providing crucial information to guide present decisions and future planning.
To understand your funeral home’s health accurately, contact a professional business appraiser like NewBridge Group today. We employ appropriate valuation methodologies and consider the industry’s unique aspects to arrive at a fair and realistic business valuation for your funeral home.
NewBridge has been around for over 20 years and its sole focus is in the funeral service industry. We have comparable, recent funeral home transaction data that many other generalist valuation firms and CPA firms do not have access to. In addition, we can show a prospective seller what a likely offer would look like (not only the offer amount, but also the structure- including cash up front vs. payments over time).
As you are likely aware, today’s interest rates and inflation have significantly impacted valuations. We are seeing a bifurcation in the marketplace. Average funeral homes are seeing depressed valuation multiples, while above-average funeral homes are seeing premiums. There is a dearth of sellers on the market today, so those in play are very attractive. We believe it’s easier to stand out in a void than in a crowd. Please reach out for a casual conversation with us to learn what we believe is average vs. above average.
The NewBridge Group, Inc.
404-542-9956 (mobile)