Large death care providers, such as Service Corporation International, have used mergers and acquisitions (M&A) to become major players in the highly fragmented funeral industry. Using M&A is an opportunity to combine your business with another business in the death care industry, such as cemeteries and funeral homes, or other death care service providers. By combining forces, you’ll have a larger market share and will be able to grow exponentially.
This growth will increase your funeral business’s production giving you the opportunity to gain financial superiority over your competitors. Here are some ways that using M&A as part of your business strategy can benefit your funeral home business:
New Markets
If your market area is faced with unfavorable demographic trends, mergers and acquisitions can help you expand into markets with more favorable demographics. For example, urban centers are attracting senior citizens who downsize and seek homes near public transportation, entertainment, and services.
New Products and Services
You can use M&A deals to acquire funeral homes and other death care services providers offering complementary products and services such as cremation and eco-friendly funerals. Having more products to offer to your customers is a great way to draw in future business.
Easier and Less Costly
Mergers and acquisitions can be an easier and less costly way to expand your funeral business compared to starting from scratch. It can be more expensive and time consuming to develop a new location, hire personnel, and get a business up and running, than acquiring an already successful funeral home operation.
Find Talent
Talented people with good standing in their communities can be hard to find. M&A can be a source for people you need to grow successfully. It may also make it easier to develop succession planning and provide an eventual exit strategy for you to retire.
Increase Profitability
In addition to increased profitability from higher revenue, M&A can provide opportunities to increase profit margins. Eliminating duplicate costs and spreading overhead across a larger revenue base will increase your bottom line.
Tax Benefits
M&A can be a source of tax benefits depending on the tax status of the acquisition target, the structure of the transaction and your tax position. Tax considerations should be an integral part of your M&A planning and due diligence.
Mergers and Acquisitions are a Good Business Strategy
The benefits of M&A for your funeral home business can be substantial. M&A should be part of your business strategy to increase growth, market share, and profitability.
The key to successfully using M&A is partnering with experienced business consultants. Professionals who have a track record of helping clients in funeral home and other death services businesses successfully complete M&A transactions.
Contact MKS&H Today
MKS&H provides the business consulting, accounting and tax services that you need for successful M&A. We give our clients the personal care and attention of a boutique firm combined with the experience and expertise that you would expect from a larger firm.
We even have a highly skilled and experienced Death Care team which can help you through the entire M&A process. If you would like to learn more about the benefits of M&A for your funeral home business, please contact us today.
