Mortuaries Funeral Homes
We have years of experience in this industry for the valuation of the business, equipment and real estate. Let us help you with our valuation consultation in all areas of the valuation of mortuaries, and cemetery businesses. Below is a brief synopsis of the industry.
Description of Business
Establishments primarily engaged in preparing the dead for burial, conducting funerals, and cremating the dead.
General Industry Information
The funeral home industry is an exceptionally stable business. Characterized by predominantly private, localized operators, many families have profited from running this type of business. The 1990s saw takeovers of many small funeral homes. However, many regionally specialized operators maintained their close-knit businesses. Specialization in terms of services available distinguishes operators from their competitors, and attracts reliable customer bases.
The industry was plagued with bad publicity during the early 1990s, when the Federal Trade Commission investigated the practices of some funeral homes. Regulation has since forced these businesses to charge for each service on an individual and itemized basis, rather than billing premium rates for bundled packages. The industry standard today mandates full, up-front disclosure to potential customers in the form of price lists.
Basic operations include preparing the deceased for embalming, coordinating funerals, remembrance ceremonies, and burial. As the prices of preparing funerals have increased, a sub-industry specific to funeral planning has emerged. Industry certification for Certified Preplanning Consultants is now available through the National Funeral Directors Association.
It is important to review any lease encumbrances. Special permits are often required by local zoning departments to operate crematoriums; however, many homes opt to not include cremation services, given the lower market price for conducting cremations instead of embalming.
Red Flags and Risks
The reputation of the funeral home is one of the most important items to consider. This can be quantified by assessing customer evaluations and the level of repeat business. Competition from existing funeral homes is the greatest risk for any given funeral home owner. Issues such as licensing and city permits may depress the supply of new funeral homes, positively affecting the sale of an existing or grandfathered business. Buyers should consider what role they will assume after an acquisition, and determine if additional employees will need to be hired. If the seller was a licensed mortician, it will be necessary for either the buyer or another individual to become certified. Potential buyers should also gauge the business’ relationship with life insurance providers.
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