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Key Factors that Affect the Value of Your Funeral Home Business

August 28, 2017

Many funeral homes will have a combination of both positive and negative factors that affect business value—all of which are taken into consideration during a professional business valuation by a CPA firm. The following summary provides a broad overview of the factors that may move the needle up or down when it comes to the valuation of your funeral home business.

Factors that have a positive influence on market value:

  • Strong sales mix and local awareness
  • Located in a relatively major population center
  • High quality, committed management team (if they have non-compete agreements, even better)
  • Stable and significant market share, and/or consistently growing market share
  • High volume—Industry experts say any number of clients greater than 300 per year puts you in this category
  • Relatively new facilities that do not require immediate capital investment

Factors that may have a negative influence on market value:

  • Declining market share
  • Client volume of less than 300 per year
  • High cremation rate or a cremation rate increasing faster than the national average
  • Poor financial statements
  • Any history of fraud or other financial problems
  • Outdated facilities in need of capital investment
  • Poor management team
  • Strong management team without non-compete agreements

The factors listed above provide a brief overview of the market and other forces that may impact the value of a funeral home. If you are considering selling your funeral business or acquiring a new one, contact us to learn more about our business valuation and advisory services—designed to help you move the needle up in terms of business value.

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