By Thomas A. Parmalee
When you get a chance to make three to four times the typical rate of return compared with a traditional investment, you take a good look at it.
At least, that’s what you do if you’re Steve Shaffer, president, CEO and board chair at Homesteaders Life Company, which has been serving the funeral profession since it was founded in 1906.
Then again, Shaffer has always been a numbers guy, having earned his accounting degree at Indiana University Bloomington and starting his career as a certified public accountant and auditor at the prestigious Ernst & Young in Indianapolis.
After that, he co-founded Keystone Group, which he served as chief financial officer and executive vice president before going on to become a co-founder of Foundation Partners Group, which he served as president and CEO.
So, when the opportunity came to take a major equity stake in Park Lawn Corp., one of the best-known funeral home operators in the profession, he was intrigued. The fact that he became convinced that he could consummate the deal and actually double down on Homesteaders’ commitment to funeral service was likely the cherry on top of the sundae.
“Creative investments like this one position us to offer added value to all of our customers through things like higher policy growth and new tools and innovations that help them connect with more families,” Shaffer told FuneralVision.com.
In short, in creating an affiliate to make an investment in Park Lawn, he saw benefits not only to Homesteaders but to funeral homes everywhere – current customers and prospective customers.
We recently caught up with Shaffer to get some more details on how the deal materialized and what he envisions for the future.
Viridian Acquisition Inc. (an affiliate of Homesteaders) and Birch Hill Equity Partners Management are teaming up to take Park Lawn private. How much is Homesteaders investing?
Homesteaders (by way of Viridian Acquisition) will make a $250 million investment in Park Lawn alongside Birch Hill Equity Partners. This investment, while significant, places us in a minority position in the company. Actual percentages will be determined at closing.
The press release Park Lawn issued announcing the deal noted the all-cash transaction is valued at approximately $1.2 billion, including Park Lawn’s net debt. Will Viridian assume any of Park Lawn’s debt?
The press release issued by Park Lawn detailed the transaction in Canadian dollars. In U.S. dollars, the total amount is closer to $970 million. Of that, Homesteaders is investing $250 million.
Homesteaders will not have any obligation on the debt. There will be a standalone entity that is both obligated to and servicing the debt. This is simply an investment for Homesteaders.
Did Viridian Acquisition exist before this transaction?
Viridian Acquisition was created solely in anticipation of the Park Lawn transaction which, for confidentiality purposes, was code named “Project Viridian” throughout the process. Its formation was made possible by the work we did early in 2024 to reorganize as a mutual holding company.
What is your relationship with Birch Hill Equity Partners and how did you find each other and decide to agree to team up on this deal?
BMO Capital Markets introduced us to Birch Hill in early 2024. We knew we wanted a like-minded partner to help facilitate the transaction. Birch Hill was selected carefully and specifically from a variety of potential partners because they fit so well from a cultural standpoint with both Park Lawn and Homesteaders, and they agreed with our long-term strategy and view of the opportunity.
Does Birch Hill own other companies tied to funeral service? Or is this a new space for the company?
Birch Hill has investments in adjacent spaces, including a natural stone business that supplies monument makers, but they have not previously invested in funeral service directly.
What were the challenges, if any, of buying a company based in Canada but with significant U.S. operations?
This was a complex transaction involving several parties, including a public company and a regulated insurance company, but Park Lawn’s status as a Canadian company with cross border operations did not make it more challenging.
How do you foresee this affecting the footprint of Homesteaders in Canada moving forward?
Homesteaders is always exploring new markets and opportunities, but we do not have immediate plans to sell our products in Canada.
How – if at all – do you feel this transaction will affect your relationship with firms not owned by Park Lawn?
This partnership with Park Lawn provides us with a path to infuse capital into the profession at a time when it is difficult for operators to find informed, long-term, secure, reliable financing partners. It deepens our commitment to the funeral profession in a significant way, which should be attractive to any funeral provider who is looking for a partner that is committed to the space for the long term.
This investment will also place Homesteaders in an even stronger financial position, with returns 3-4 times higher than traditional investment yields. That’s money we can reinvest in higher policy growth and new tools to help funeral providers connect with more families.
Have you talked about any targets in terms of the number of acquisitions you’d like Park Lawn to make on an annual basis moving forward, in terms of EBITDA, families served, number of rooftops, etc.?
We have not discussed any specific changes to Park Lawn’s annual acquisition targets with the Park Lawn team. Those decisions and strategies will continue to be managed by Park Lawn’s management team and the board of directors following the closing of the transaction. Homesteaders will not direct those decisions.
Do Park Lawn firms use Homesteaders as a preneed provider currently – and what about moving forward?
A number of Park Lawn’s U.S. locations have used Homesteaders in the past, but Park Lawn as a whole does not currently write business with us. We anticipate many synergies moving forward, and the potential of using Homesteaders to fund their preneed program will likely be one of them; however, we have not yet determined how or when this transition will occur. We are committed as an investor in Park Lawn to allow them to make the best operational and strategic decisions for their company.
How have your customers reacted to this news? What concerns have you heard, if any, and how have you addressed them?
A transformational transaction like this is always going to invite extraordinary interest, and that has certainly been the case here.
We’ve been pleased, but not surprised, that the feedback we’ve received from funeral providers has been largely positive. Our customers understand that this is a creative, smart way to step up our financial support for the profession, and they can see how their funeral homes and policy owners will benefit from higher returns we’ll see from this investment.
Our customers also understand that Homesteaders is committed to providing an exceptional service experience to every funeral home, regardless of their location, size or ownership structure. We’ve been proactive in ensuring our funeral home customers understand the benefits of this transaction for Homesteaders and why it’s a positive move for the funeral profession, and that’s been a big factor in the positive response we’re seeing in the marketplace.
What did you see as the biggest risk in consummating this transaction. What opportunities did you see?
My goal as CEO is to help ensure Homesteaders will be around for the next 100 years. As such, we make decisions today that will drive our growth five, 10 and 20 years down the road. There’s a short-term risk in making big moves that are this complex, but it’s one we can navigate with clear, crisp, proactive communication and consistent commitments in our actions for all of our customers in both the long and short term.
While this move may cause some short-term waves, we would not be pursuing this strategy if we didn’t have high confidence in the long-term opportunity for Homesteaders.
Were other firms competing to provide capital to take Park Lawn private – or was this a rather closed process?
Our discussions with Park Lawn began as a friendly exploration of our mutual desire, as two strong, forward-looking organizations, to do something really positive for the profession. It was the right opportunity at the right time for Homesteaders and Park Lawn, and there were a lot of synergies between our cultures and strategic mindsets that made it immediately clear that this was the right direction for both companies.
How much of a factor was it that leaders at Homesteaders, including yourself, have had a long history with Park Lawn’s executives? How did that type of familiarity with people such as J. Bradley Green, the CEO of Park Lawn; and Jay Dodds, the company’s chief operating officer, help move things along?
Our relationship with the leaders at Park Lawn certainly played a role in bringing both parties together for those initial conversations from a strong basis of trust. This is a relationship business, and we make a point to stay connected with stakeholders across the profession. Homesteaders has a deep commitment to the funeral space, so there’s a real benefit for us in all aspects of our business to maintain connections with the key players and creatively exploring ways to leverage our strengths to complement partnerships like this. There was a similar mindset at Park Lawn that resonated with both teams from the very beginning.
Once private, will Park Lawn continue to have a board of directors, and if so, what changes do you foresee to the board?
Yes; as with most all organizations, once private, Park Lawn will continue to be governed by a board of directors. Homesteaders, Birch Hill and Park Lawn will all have representation on the board of directors, though the makeup of the board won’t be finalized until the transaction closes, which we expect will be sometime in August.
What else would you like the profession to know?
This is a really positive thing for the profession.
We’re bringing hundreds of funeral homes and cemeteries back into private ownership where they’ll be managed by a team committed to the funeral profession for the long term. We’re doubling down on our commitment to be a reliable capital partner in the space, both through this transaction and through continued growth and investment in our funeral home lending program. And we’re doing this for the long-term. This is something that will position our 118-year-old mutual company to be here and remain strong for the next 100 years.
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