A new survey of funeral home executives in New Jersey, New York, Pennsylvania and Connecticut found the majority see the pending merger of two industry giants as having a negative impact on their industry. At the same time, a growing number want to grow or acquire other firms, according to the survey by the accounting and business consulting firm Citrin Cooperman.
In May, Service Corp. International agreed to acquire Stewart Enterprises Inc. to create a company with 2,168 locations in 48 states and about $3 billion in annual revenue. The merger is under review by the Federal Trade Commission; in July, the companies announced the FTC had requested additional information, but the firms said they expect to complete their merger in late 2013 or early 2014.
The Citrin survey found 63 percent of respondants viewed the merger as a negative development. At the same time, the number of funeral home owners and directors considering expanding or an acquisition doubled — from 14 percent in 2012 to 28 percent in this year's survey. Those interested in selling dropped slightly from last year.
"The gradually improving economy has emboldened some funeral homes to expand their business," said Ed Horton, partner in charge of Citrin Cooperman's funeral home practice. "There is also more awareness that consolidation, even on a local level, may be the future of the profession."
The survey found 40 percent don't know the present value of their funeral home. Of the 60 percent who said they know the value of their business, almost half haven't valued their businesses in more than two years.
According to Citrin Cooperman, there is a critical need for succession planning since most owners don't have an exit strategy. The firm will host a roundtable discussion on succession planning on Nov. 4, from 11 a.m. to 1 p.m., at the firm's New Jersey office, 290 W. Mt. Pleasant Ave., Livingston. Horton; Joe Stefans, of Investors Savings Bank; and attorney Peter Tanella, of Mandelbaum Salsburg, will lead a discussion on how to identify and develop the skills required for funeral home owners to take their businesses to the next generation.
Citrin does an annual survey of funeral homes, and this year's responses came from 300 funeral homes in the four states.
Profitability; the continued growth in cremation; and the public's increased desire for nontraditional, low-cost funerals were the top concerns.
"The shift away from full-service funerals is here to stay, and funeral home owners need to create business strategy around this fact," said Horton. "As the trend of smaller, non-traditional funerals persists, it will take more cost-cutting in order to remain profitable. Funeral home owners will need to re-evaluate expanded services and create pricing for knowledge-based services."