How do I tell what a funeral home owner actually takes home?

The profit line in a funeral home’s statements may not show what the owner personally receives. Pay, benefits, family wages, vehicle costs and property can all be mixed together. To judge the business you are buying, you need to pull those apart and see what a new owner would actually earn after paying a manager and staff at fair rates.

Owner pay and family on payroll

Ask what the owner is paid in salary, dividends and benefits, and who else in the family is on payroll. Some relatives work full time; others are paid for little work. Ask which roles you would need to fill and what they would cost. An accountant can help you rebuild the statements on that basis. See also how to verify a seller’s financials.

Owned real estate

Many homes sit on land the owner holds personally or through another company. If you buy the business only, you may pay market rent that the current statements do not show. If you buy the building too, you are also buying property. Ask for both views side by side so you can see what each part contributes.

Results per call and by service mix

Ask for the number of calls each year and revenue by type: burial, cremation, memorial services and merchandise. Looking at results per call shows whether changes in income come from volume or from the kind of service families choose. A trend over several years tells you more than one good or poor year.

At-need revenue and prepaid funds

Ask your accountant how services carried out now and money families have paid in advance are each recorded, and whether the seller can count the advance money as income. Ask your accountant and lawyer how those funds are treated in the statements and at closing.