By Thomas A. Parmalee
A few years ago, Selected Independent Funeral Homes began noticing an interesting trend: Member firms were being acquired by corporate and private equity investors at an alarming clip.
It wasn’t just one or two … it was “a wave,” according to Sarah Pojanowski, general counsel of the association.
“There were several reasons underlying this trend,” she said. “Many funeral home owners were nearing retirement but had no obvious successor in the family or among their employees. Like many small businesses, funeral home valuation often largely depends on real estate holdings and requires significant capital. Many owners required access to that capital in order to secure their own future in retirement. At the same time, corporate – and especially private equity – firms were flush with capital and looking for stable returns. Funeral service was a natural target for these investors.”
As an association that is always looking for new and innovative ways to serve its members, Selected had an idea: What if it could somehow help connect members who wish to sell their firms with members interested in acquisition and investment opportunities?
In early 2021, it introduced the Selected Acquisition Marketplace, otherwise known as SAM. Already, it has made a difference for members looking to take their next step – either as buyers or in moving forward with retirement.
We recently caught up with Pojanowski to learn more. Edited excerpts follow.
What is the purpose of the Selected Acquisition Marketplace?
The Selected Acquisition Marketplace is designed to connect members who wish to sell their firms with members interested in acquisition and investment opportunities.
After noticing recent acquisition trends, we pivoted to offer an alternative to corporate/private equity sales. Many funeral home owners wanted to sell to another independent but didn’t know how to make that happen. Concerns about confidentiality – and just the basics of figuring out how to connect with interested independents – often seemed insurmountable.
At the same time, many Selected members are seeking additional opportunities for growth. While new construction is an option, it is often easier to open in a new market with an existing funeral rooftop than to start from scratch.
As a result, the Selected Acquisition Marketplace was born. It offers Selected members a way to confidentially list their firm for sale, and for other Selected members interested in a listing to reach out and connect with those firms. The marketplace also allows real estate brokers to offer listings to members in a separate section.
In short, the Selected Acquisition Marketplace helps keep Selected members independently owned and helps them grow their businesses.
Is this only available to Selected firms who want to sell their firm … or can nonmembers participate?
Nonmembers or their agents can list firms as a For Sale by Owner in the broker listings.
The Selected Acquisitions Marketplace is a member benefit for our Premium members, and any member can obtain access for a small fee.
What is the cost to participate?
The marketplace charges a small listing fee of $35 per month for a minimum of three months, or $25 per month for a minimum of six months.
Premium members get access for free. Members can subscribe for $100 per year.
Who are the typical subscribers?
Our subscribers are all Selected members. The other participants have been brokers. We would love to encourage more outside use of the broker platform, including individual outside listings.
Are there any listing parameters that people should know about, such as minimum number of families served, etc.?
No, there are no parameters regarding size, call volume, or even being a Selected member. However, Selected member firms are listed separately from broker listings and nonmember firms. Access to the Selected Acquisitions Marketplace allows a member to view offerings from both members and outside sources.
What type of information must a business provide to be listed in the marketplace? Do they have to provide the name of their business?
While Selected is aware of the identity of the firms for sale, that information is not disclosed to anyone who inquires about a listing. The listings themselves provide an idea of the market size, call volume, number of staff and other basic information.
When a firm inquires about an offering, their identity is passed to the seller. The seller can then either choose to contact the inquiring firm or not.
After making a connection, Selected steps out of the picture. Any further discussions are between the parties alone. Selected serves as a matchmaker, not a party to the transaction.
How many firms are typically listed in the marketplace in any given month? Do listings expire after a certain amount of time, and if so, can they be renewed?
This varies, but on average there are several listings in the database at a time. Listings can be renewed as long as you like.
How many successful pairings – matching buyers and sellers – occur on average in a year?
This is a young program, but Selected has experienced success pairing firms – and we would love to connect more buyers and sellers!
In your opinion, is this an underutilized service?
This program absolutely is underutilized. It offers sellers such a great opportunity to sell your firm to a buyer that you know will treat the families in your community with the level of respect and service you have provided for decades … and it offers buyers the opportunity to purchase a firm that already has an outstanding reputation for client service.
It also offers brokers and non-Selected members the opportunity to offer their funeral homes to independent firms of the highest quality. If you need to sell but are concerned about your family’s legacy in your community, the best thing you can do is ensure that the next person running your family business will serve your client families as you would.
Whether you are considering selling or growing your firm, the Selected Acquisition Marketplace provides exciting opportunities for you to consider.
When successful, does this service ultimately save members money?
It certainly could eliminate the need for a broker. However, we always encourage firms to conduct a business valuation and use a qualified real estate attorney, preferably one with experience in funeral home sales, to assist them with the sale process.
Where can funeral professionals go to receive more information about the marketplace?
To sign up or for more information, firms can visit the Selected Acquisitions Marketplace website.
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