Seller Beware - The Perils Of Selling Your Funeral Home For Too Much!

The recent history of funeral service is littered with stories of what happens when people pay too much for a funeral home. We can all recall the very public downfall of the Loewen Group or look at any of the community-leading firms from the past that are now shadows of their former selves. From where I sit, the facts are pretty clear, the root cause of most of this was over-valuation of the properties when they were acquired. There is plenty of evidence of the negative impact of an inflated price on the future of the funeral home after the sale.

At this point it would be easy to conclude that this is intended as a warning to buyers but it’s not. The alarm I’m sounding is for the sellers and it is a reminder that choosing to be a little too greedy can be a disaster for the future of your firm. 

Many of us have poured our life’s work into our funeral homes and, in doing so, the best professionals I know have elevated themselves and their firms to a respected and valued role in their communities. Many of these businesses have become institutions in their hometowns and have storied pasts that now go back a hundred years or more. Those of us fortunate enough to own these firms today are, in fact, just the most recent stewards of these great funeral service firms. Our own success has often been built on the foundation of someone else’s accomplishment.

After more than 25 years in the business, and as I see retirement and succession decisions getting closer, I believe those of us in this position have a choice to make. We all deserve to be paid fairly for the value we’ve built in our businesses, however, we also have a responsibility to pass them on in a way that allows them to survive and thrive. To be clear, that means not burdened by an excessive mortgage that the business simply can’t sustain. The impact of selling a funeral home at an over-inflated price will show in the future through poor investments in staff, pressure to drive pricing ever higher and, in many cases, the inability to maintain the funeral home’s competitive position. 

Particularly right now, with low interest rates and a ready supply of ambitious younger colleagues who really want the opportunity we’ve had, many of us will have opportunities to take advantage. As sellers we can decide to go with the greedy, “it’s not my problem after I am gone” perspective or take a more even-handed approach that ensures we get the value we are due while leaving a sustainable business behind. 

That decision will have a huge impact on whether the great institution you have built will be regarded as a great community business in the future – both in your own eyes and in the eyes of the community who supported your success. So, what will you be saying five years down the road: “I was a good steward and left behind something of consequence and value” or “I took the money and ran?” 

Caveat emptor – buyer beware is always good advice but, in this case, seller beware may be equally wise counsel.