Selling A Funeral Home or Cemetery
Selling a funeral home or cemetery business can be a challenging undertaking. It’s tough to say goodbye to something that you may have allocated all your time and resources to build and perfect, giving so much of one’s self in the process. However, timing is one of the most crucial elements when selling a funeral home or cemetery. Determining the right moment to step away is as important as finding the right buyer. That’s where an experienced team can help guide a seller through this process, from initial contact with a potential buyer to the closing table. So, where does one start?
Initial Contact
The selling process begins by having a trusted team perform a valuation of the business. They can determine the business’ value by analyzing several facts, including growth potential, the historical performance of the business, market trends, and comparable transactions. From there, a clear and detailed exit strategy is developed, which includes targeting specific buyers that most closely align with the seller’s values.
Transaction Package
The next step is creating a Transaction Package or Confidential Information Memorandum (CIM), a detailed business overview, to attract interest from qualified buyers who have signed a non‑disclosure agreement (NDA). This process generally takes 10-20 business days, but the need for additional data or review meetings can cause delays.
Offer Analysis
After accepting and agreeing to the CIM, an interested buyer will send out an Expression of Intent (EOI), a formal document that conveys interest in purchasing the business. This is where the buyer’s questions about the business are answered to ensure both parties are aligned.
Once aligned, the buyer will send out a Letter of Intent (LOI), a highly detailed document that outlines the terms of sale and price agreed upon. It’s important to carefully analyze every part of the LOI and amend any errors or discrepancies before moving forward. This process can be delayed by legal issues with the LOI, a question & response period with the buyer, a request for more data, or additional on-site visits, which are common during this stage.
Due Diligence
Due diligence takes place 6-10 weeks after signing the LOI, during which the buyer and their team thoroughly examine the business. This can include third‑party inspections, property analysis, inventory lists, and reviewing pre‑need contracts. At the same time, terms for an Asset Purchase Agreement (APA) will be negotiated, which outlines the transaction details. It also covers any additional contracts like non-competes or consulting/employment agreements, in the case of post‑sale seller involvement.
The due diligence process can be delayed if significant issues with the business or property arise, if additional inspections are scheduled, or if attorneys on either side are unfamiliar with the funeral home and cemetery market.
Closing & Funding
Once the APA and a Settlement Statement are signed by both parties and the transfer of ownership and payment dates/instructions are finalized, the buyer can begin securing third-party financing if needed. This process can be delayed by financing complications with the buyer or if any new legal questions arise.
Selling a funeral home or cemetery business is a very personal and challenging decision and can take over six months, from initial contact with the buyer to performing any final due diligence and eventually closing. Completing all the tasks needed to ensure a successful sale, such as performing a valuation, creating a transaction package, and painstakingly analyzing any offers that arrive, is something that shouldn’t be done alone. There are qualified experts to turn to for help.