Selling Your Funeral Home By Douglas O. Meyer – Mortuary Management

Some people approach the sale of their funeral home in an almost casual manner.  They talk to their competitor, the competitor is interested and they agree on a price.  If they’re lucky, the deal works well for both of them.

Very frequently, however, this casual, off-the-cuff approach results in problems: the seller discovers (too late) his firm was worth more than the sale price, or he ends up paying more in taxes than necessary because the deal wasn’t structured properly.  Sometimes the parties later realize they don’t agree on what was actually being sold.  For example, the seller intended to keep the real property, whereas the buyer thought it was included in the sale.

To minimize the possibility of problems and to make the best deal possible, approach the sale in a businesslike manner.  Begin by discussing your plans with your tax advisor, so that he or she can create the most tax-efficient plan in which the sale could be accomplished.  Hire an expert to value your business and to help you market it.  Hire an attorney to prepare the necessary sale documents.  Yes, hiring advisors will cost you money, but remember: your business and the real estate on which it sits (if you own it) are likely your biggest assets.  Don’t you want to maximize the benefits of a sale – and minimize the problems?

Once you have your advisors in place, focus on what is most important to you, and talk to your advisors about these issues.  Do you want health insurance provided by the buyer?  Do you want to be sure the buyer offers employment to a longtime employee?  Do you want to work for the new owner and have him pay for certain benefits, such as membership in a country club?  It’s important to identify issues important to you and to inform potential buyers of them early in the process so that the people or companies interested in your firm can account for such requests in formulating their offers.

Think carefully about whether you can be truly happy working for the new owner.  After running their own business for many years, many people find it difficult to take orders from someone else.  Also, bear in mind that if you sign an employment agreement, the new owner will expect you to promote the funeral home in your community.  If you now or suspect that you won’t agree with the new owner’s business philosophy and won’t feel comfortable singing the new owner’s praises at civic functions and service club meetings – don’t enter into an employment agreement.

Finally, read the draft of the purchase agreement carefully, tell  your attorney about any corrections and ask questions about anything in the agreement you don’t understand.  Make sure all major points covered in the letter of intent are included in the purchase agreement.  Selling your funeral home is a big deal, so treat it accordingly.  Proceed cautiously and with lots of advice.

(Please note: this column is necessarily brief and doesn’t purport to be a complete explanation of the law discussed.  The information presented is not intended to be, and should not be taken as, legal advice.  For advice concerning your particular situation, please consult an attorney.)