Opportunities
3-Location Funeral Home Business in Western NE
Sold
Specifications
Based in Western Nebraska, this funeral home business has locations grossing over $500,000 combined. In operation for decades, the current owner has been managing the business for 30 years and is netting a 20% profit margin. All real estate is available for purchase in a separate transaction through a licensed real estate broker, and all homes are fully-equipped with offices, storage and chapels.
The seller is a Funeral Director managing the main location. Assisting him is another Funeral Director who manages a second location of the business, and all homes receive help from part-time staff as needed. Part-time staff includes an on-call EMT for removals and helpers to assist with funerals.
Services are provided across Western Nebraska and Northeastern Colorado, and include arrangements for memorials, cremations and graveside ceremonies. In 2016, 89 funerals and cremations took place between all locations, and marketing services across the territory could see these numbers rise. A buyer could also consider opening a Colorado location down the road.
Included in the purchase is $169,000 in assets, including hearses, vehicles for removals and processionals, and an inventory of 48 caskets and other assorted pieces. Listed at $343,000, a buyer paying 10% down could expect to see a first year’s profit of $59,907 after debts.Business Highlights
- Years in Business: Under current owners for 30 years
- Location and Service Area: Western Nebraska
- Number of Clients: 89 funerals/cremations in 2016
- Building: All buildings for sale in separate transaction with a licensed Nebraska real estate broker
- Reason for Selling: Retirement
- Employees: 1 Funeral Director that manages 1 location; 6 PT helpers between all homes
- Seller Training Period: 90 days
- Growth Opportunities: Continue to expand services into Colorado
- Current Owner’s Responsibilities: Funeral Director – manager of main location and shares duties with other Funeral Director
Financial Highlights
- List Price: $343,000
- 2016 Gross Sales: $528,271
- 2015 Gross Sales: $568,240
- 2015 Cash Flow: $114,508
- Assets Included in Purchase:
- $50,000 of Equipment
- $119,000 of Vehicles – hearses, removal vehicles, lead cars for processionals
- Inventory – 48 caskets between all locations, with prices ranging from $100 to $8,580 retail
- Intangible Assets – Decades of services in Western Nebraska; recognition and reputation; excellent website and social media presence
Cash Flow Analysis
| Description of Financial Statement | Tax Return | Tax Return | Tax Return | Notes |
| 2016 | 2015 | 2014 | ||
| GROSS SALES | $528,271 | $568,240 | $559,541 | |
| Net Income Shown on Financial Statement | $-664 | $3,547 | $35,741 | |
| ADDBACKS | ||||
| Compensation to Owner | $63,000 | $63,000 | $62,000 | |
| 11% Tax on total W2 Salaries | $6,930 | $6,930 | $6,820 | |
| Depreciation | $26,947 | $22,557 | $15,061 | Non-cash item |
| Meals & Entertainment | $441 | $541 | $390 | Personal expenses unrelated to business |
| Profit Sharing | $15,750 | $15,750 | $0 | Owner's portion of profit sharing (15% of salary) |
| Personal Health Insurance | $0 | $2,183 | $0 | Seller's personal health insurance for 2015 (COBRA) |
| TOTAL ADDBACKS | $113,068 | $110,961 | $84,271 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $112,404 | $114,508 | $120,012 | |
| Profit Margin | 21.28 % | 20.14 % | 21.45 % |
- 21% profit margin in 2016
Services
- Funeral planning
- Preparation and filing of necessary notices, authorizations and permits
- Embalming and preparation of body
- Forwarding and reception of remains
- Cremation
- No in-house cremations are performed as the homes do not have incinerators
- The business utilizes a crematory in Sterling, CO
- Immediate burial
- Anatomical donation
- Traditional funeral services
In addition to services, clients are able to choose from a selection of caskets ranging in price from $100 to $8,580 retail, as well as the following:
- Vaults for caskets and urns
- Acknowledgement cards
- Memorial candles
- Crucifixes
- Memorial DVD’s
Statistics
- 52% of services were cremations in 2016
- The average traditional funeral costs around $11,000
- The business has between 175 and 200 pre-need accounts
Employees
- Funeral Director
- Manages 1 location and shares duties with Owner
- Embalms and prepares bodies
- Plans and coordinates funerals
- 6 part-time helpers
- Assist with funerals
- Assists with minor preparation of bodies (i.e., clothing)
- Assists with removals
- There is an on-call EMT to provide removal services as well
Assets Included in Purchase
- $50,000 of Equipment
- Tables, chairs, fixtures, furniture, computers
- $119,000 of Vehicles
- 2 Cadillac Funeral Coaches
- 2 Cadillac sedans for processions
- Chrysler Town & Country for removals
- GMY Yukon for removals
- Suburban for removals
- Inventory
- Roughly 48 caskets between locations
- Urns, burial containers, candles, crucifixes, vaults
- Memorial packages and more
Growth Opportunities
- Business has 1 major competitor, but most other funeral homes are 1+ hours away
- A buyer could consider opening another location in Northeastern Colorado or simply market more in Colorado to capture more business there
- The same could be done in Southwestern Nebraska
Valuation Details
The Firm Business Brokerage used a Cash Flow Valuation methodology to determine the Purchase Price of the business. The formula used is as follows:
Cash Flow x Multiplier = Price
“Cash flow” is the sum of net income plus any owner perks and non-onward going expenses.
“Multiplier” is a prescribed number between 1 and 5 determined by a 100-point, 20-question rating system used to determine the business valuation (average is 3).
The Cash Flow for 2015 is $114,508. The prescribed multiplier is 3.
With this information, the computation result follows:
$114,508 x 3 = $345,524
The List Price for the business is set at $343,000.
Funding Example, based on the following:
- Buyer down payment of 10% ($34,300)
- Seller carry of 10% ($34,300) at a rate of 4.5% for 5 years
- Bank loan of 80% ($274,400) at a rate of 5.25% for 7 years
- After loan payments, a buyer with a down payment of $34,300 would receive a return on investment of 174% in the first year.
A lender is required to have a minimum 1.5 coverage ratio for any business loans extended. At a proposed Purchase Price of $343,000 with the terms listed above, the coverage ratio is 2.1.
Please note that the decision of whether to extend a loan on any sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available.Print, sign and send to:
210 N 78th St. 2nd FloorOmaha, NE 68114
Or fax to:
f 402.939.0857