What Are Today’s Funeral Home Buyers Looking For?
Today’s funeral home buyers consist of various types of buyers. For the most part, the active regional and public buyers are well funded, experienced, and discerning. We’ve found that while they may differ in terms of culture and operating styles, they have much in common when it comes to evaluating acquisition targets.
If you are a funeral home owner contemplating a sale this year, or perhaps in the next several years, here are some observations we’ve noticed when it comes to what buyers are seeking:
A Stable & Experienced Ongoing Management Team
Buyers value a funeral home with a professional management team already in place – it assures them that the business will continue to operate smoothly even after the transition. A well-functioning team with industry knowledge, leadership skills, and a strong work ethic instills confidence in potential buyers. Demonstrating a track record of successful management and employee retention can significantly enhance the attractiveness of the funeral home as an acquisition opportunity. If a strong management team is lacking, it is prudent to consider paying up to bring in a strong Managing Funeral Director. This investment should pay off down the road once you decide to sell. If recruiting remains a hurdle (which is very common across the U.S. in funeral service), buyers will still consider your business, albeit, typically at a lower value.
Professional Accounting & Reporting
Buyers prioritize transparency and financial stability when evaluating a potential acquisition. They expect accurate and organized financial records, including comprehensive accounting practices and regular financial reporting. Having professional accounting systems in place demonstrates the funeral home’s commitment to financial integrity and provides potential buyers with a clearer understanding of the business’s profitability, cash flow, and potential risks.
Pricing that Reflects the Local Competitive Landscape
Buyers consider the local competitive landscape when assessing the value of a funeral home. Pricing that aligns with market norms and reflects the business’s competitive position is crucial. Overvaluing or undervaluing services can deter potential buyers or raise suspicions about the business’s financial health. Conduct a thorough market analysis to ensure you are aligned with other funeral homes of similar size.
Culture
The culture of a funeral home plays a significant role in attracting buyers. They seek businesses with a positive and compassionate culture that aligns with their values and the community’s expectations. A strong emphasis on customer service, empathy, and a personalized approach to funeral arrangements can set a funeral home apart from its competitors and make it more appealing to potential buyers.
A Rational Understanding of Your Market Value and Realistic Expectations
It is essential for funeral home owners contemplating a sale to have a realistic understanding of their market value and to have reasonable value expectations. Overinflated expectations can lead to prolonged negotiations or even deter potential buyers. Engaging professional advisors like the NewBridge Group can provide owners with an objective assessment of the funeral home’s value and help set realistic expectations for the sale process.
Professional Advisors
Buyers value the involvement of professional advisors during the sale process. These advisors may include business brokers, attorneys, accountants, or consultants with expertise in mergers and acquisitions. Having experienced professionals on board can facilitate a smooth and efficient transaction, address any legal or financial complexities, and provide guidance throughout the negotiation and due diligence stages.
Commitment to the Process
Buyers expect funeral home owners to demonstrate a genuine commitment to the sale process; this includes being responsive and cooperative during due diligence, providing the requested information in a timely manner, and actively participating in negotiations. A proactive and committed approach from the seller can inspire confidence in potential buyers and contribute to a successful and efficient transaction.
Conclusion
By focusing on these key areas, funeral home owners can position themselves more favorably in the eyes of potential buyers, increasing the likelihood of a successful sale that meets their objectives while ensuring a smooth transition for the business and its employees.
If you are interested in a confidential conversation regarding your exit plans, please contact me any time:
Todd Reich, Co-Managing Partner
The NewBridge Group
404-542-9956 (direct)