Valuation Mergers and Acquisitions

June 17, 2019

Why is it hard to manage a national company?

“Why have some national companies had problems?” I have gotten this question more than any other one I have been asked in the past the years. I entered the funeral/cemetery world in 1984. There were several small- to medium-sized companies with big ideas. Many were privately owned. One was a public company. By the early 1990s, there were several that had crossed over from the privately-owned world to the public world. Public companies have a duty to inform their shareholders about their business. The business plan they aspired to fulfilling was: 1. Buy multiple businesses 2. Operate multiple businesses in an area 3. Bring in operating synergies to those businesses 4. Acquire merchandise and capital assets at better prices through quantity discounts 5. Maximize staff efficiencies 6. Have a lower cost of capital 7. Make more profit I have seen […]
May 29, 2019

Laying the Foundation

When starting your business, take care of the basics properly and all the rest will fall into place. The first determination an owner needs to make is which basic structure to choose for the business. One challenge is that while you know much of how the arterial system works, you do not know how the tax system works. While there are many business structure options from which to choose, the rationale behind choosing one is not so simple. Your lawyer will advise choosing a structure that will help protect you from litigation. From a legal perspective, then, you are protected if you choose anything other than a sole proprietorship or partnership. Your accountant will focus on the issues related to filing income taxes. The tax perspective, however, is much more complex. Following are the four most common business structures. 1. […]
December 14, 2018

Starting a Cemetery with No Experience Has Not Gone Well

Dear Dan, About 20 years ago my wife and decided to start a cemetery with two other couples. We knew nothing about the cemetery business before this venture began. We found land and a landscape architect. We hired companies to build some above-ground crypts and niches. We invested some of our cash and borrowed heavily from a local bank. We invested $2 million in 50 acres of land, but due to local ordinances, we can only develop half of our total space. We have 25 acres of land for cemetery use and 25 acres that must be left in its natural condition. From the beginning of this business venture, we have been losing money and sleep. We have not been cash-flow positive in any year. Now, all six of us are retiring and we don’t want the hemorrhaging of cash […]
November 2, 2018

Buying a Cemetery That Is Trusting via Surety Bonds

If you’re buying a cemetery that has funded its merchandise trust through surety bonds, you need to understand what that means and how it affects what that cemetery is worth. Dear Dan, I want to buy a neighboring cemetery. I was doing my due diligence and learned that all of their merchandise trust is funded by surety bonds. Why would someone do this? What can I do now if I want to buy this business? Not Surety in Bondville   Dear NSB, I have had the privilege of standing in this profession for four decades with one foot in the funeral world and one in the cemetery. I love the balance and perspective. I also get to see the problems. The funeral world became cursed when it invented something called “cash advances.” The cemetery world suffered the same curse when […]
November 2, 2018

Staying Too Long

A funeral home must evolve and serve consumers where they are or risk losing calls to the competition and perhaps even a slow demise. Note to Readers: This particular letter was delivered to my office rather than coming via email. Upon examination and based on the imprint on the back of the paper, the letter was typed. And based on the different levels of imprinting, I surmise it was typed using a manual typewriter. I am not conveying this to embarrass the writer, but I do think it tells you something about the answer seeker. Dear Dan, I have read your articles for almost 40 years and have a question that you may or may not be able to answer. My business was a 300-call traditional business when I took it over. Today, we only do about 150 total calls, and […]
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