Proforma Financials When Selling a Funeral Home: The Risks

A proforma financial statement is a forward-looking projection, usually prepared by a broker, showing what a funeral home could earn under new ownership. It’s often used to justify a higher asking price, but it can inflate revenue and understate expenses in ways that don’t reflect the business’s actual performance.

At first glance, proformas may seem helpful. But in many cases, they include inflated revenue projections, reduced expenses, and overly optimistic assumptions that do not align with the actual performance of the business.

As someone who has built a successful funeral home over decades of hard work, you naturally want your business to be valued appropriately. But beware: these proformas are often used as a tool to encourage you to sign exclusive listing agreements, locking you into commissions and long-term obligations — even if the business doesn’t sell or if you find the buyer yourself.

Common Risks of Over-Reliance on Proformas

• Overpriced listings that deter serious buyers and don’t meet lender criteria
• Prolonged listing periods with few or no offers
• Exclusive agreements requiring a commission — regardless of who finds the buyer
• Clawback clauses holding you liable for commissions long after termination
• Dual compensation where brokers receive fees from sellers, buyers, and lenders — often reducing your net proceeds and transparency

4BSF Approach: Independent, Confidential, No Pressure

At 4BSF, we are not brokers. We are transaction specialists focused on helping funeral home owners make informed, confident decisions.

We offer:

• Independent business valuations based on actual tax records and market comparables
• Direct connections to buyers and lenders — no inflated pricing or unrealistic projections
• Low-cost, transparent deal structures without exclusive lock-ins or hidden fees

Personalized support through every step of your transition

Frequently Asked Questions

What is a proforma financial statement?
A proforma financial statement is a forward-looking projection, usually prepared by a broker, showing what a funeral home could earn under new ownership. It doesn’t reflect the business’s actual current performance.

Why do brokers use proformas when listing a funeral home?
Proformas justify a higher asking price, which helps secure an exclusive listing agreement. We’ve seen firsthand that these projected numbers often don’t hold up under lender scrutiny once a deal is underway.

Can a proforma valuation hurt my chances of selling?
Yes. An overpriced listing built on inflated projections deters serious buyers and won’t meet lender criteria. That combination often leads to a prolonged listing with few or no real offers.

What is a clawback clause, and why does it matter?
A clawback clause holds you liable for broker commissions long after the listing agreement ends, even if you find the buyer yourself. It’s one of the most overlooked risks in a standard listing agreement.

How is 4BSF’s approach different from a broker’s proforma-based valuation?
We base our valuations on actual tax records and real market comparables, not projected earnings. We always advise clients against exclusive listing agreements and dual compensation structures, since both can work against your net proceeds.

Thinking of Selling?

Let’s have a confidential, no-obligation conversation about your goals — and how to protect your time, your proceeds, and the legacy you’ve built. Also visit our Sell a Funeral Home page for a complete guide on how 4BSF supports sellers with transparency, discretion, and real results.

Sincerely,
Matt Manske
Founder, 4BSF
📧 matt@4bsf.com | 📞 (913) 343-2357

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