The Process of Buying a Funeral Home
Search for a seller and a lender
Developing a personal network is one of the best ways to find out which owners may be considering a sale. Remember the importance of confidentiality and be discrete in your communications. Most sales representatives call on several funeral homes and are often a great source of potential leads. BSF cautions you about discussing your lead follow-up openly because the funeral industry tends to be a small community and you don’t want to derail your own opportunity. Remember that if a salesperson is telling you about a potential lead, chances are someone else may also know about it.
When evaluating the business, don’t be afraid to ask why the seller is considering a sale. Make sure the business is priced at a level that will allow you to operate successfully. Make sure the business, customers and community are a good fit for you and your family. This fit will be the key to effectively transferring the current owner’s customer relationships.
Develop a Strategy Before Negotiation
Do Your Due Diligence
Business operations are reviewed to assess the location, inventory, vendors, management, customer relations, insurance policies and any other items specific to the industry of the target business. The main point is to question each item to see where improvements can be made. Is the business located in the right market area, is inventory adequate, are vendors providing quality goods at reasonable prices, has management run operations effectively, are customers satisfied with the services provided and are insurance policies adequately protecting the company from liabilities.
Formalize the Purchase Agreement
At the close, you are not only executing the documents, the seller is transferring the entire business to you. Your attorney will help you become familiar with all of the documents and obligations to complete the close successfully. Most acquisitions are cash transactions along with promissory notes to the seller. The funds from you and your lender will be wired electronically to the seller. In addition, all payments to intermediaries are made at this time. The closing document from the escrow company will specify all of these payments.