Funeral Home Due Diligence Checklist for Buyers
By the time a buyer signs a letter of intent on a funeral home, they have usually toured the facility, reviewed summary financials and spoken with the owner about the firm’s history. Funeral home due diligence is where those impressions are tested against records, licenses, contracts and inspections. Because funeral homes carry regulatory obligations and commitments to families, diligence deserves particular care.
This checklist gives a broad overview of what buyers typically review. Licensing, preneed arrangements, real estate and crematory operations each deserve deeper attention and are covered in separate articles. This is not legal, regulatory, tax or accounting advice; work with qualified professionals on the matters that apply to your transaction.
1. Financial Records
- Business tax returns for several years
- Profit and loss statements and balance sheets, including year-to-date
- Bank statements
- Records of services performed by type, along with revenue by service category
- Accounts receivable and collection history
- Payroll records and owner compensation
- Existing debt and any liens
2. Licensing and Regulatory Compliance
- Establishment licenses, funeral director licenses and other permits, and who holds them
- Requirements for licensed managers or directors where the firm is located
- Inspection reports, complaints, violations or pending matters
- Required price disclosures and recordkeeping practices
- Whether licenses transfer or new licenses or approvals are needed
Requirements vary by jurisdiction. Our guide to funeral home licensing explains the considerations buyers commonly face.
3. Preneed Arrangements
- A schedule of outstanding preneed contracts
- How each contract is funded, such as through trusts or insurance
- Trust statements and reconciliations, where applicable
- Required reporting and any regulatory reviews
- How preneed obligations are addressed in the transaction
Preneed rules are state-specific. Our article on funeral home preneed contracts covers what buyers should understand.
4. Real Estate and Facility
- Title, survey and appraisal for owned property, or the lease for leased property
- Building condition, including roof, HVAC, accessibility and parking
- Preparation room condition and compliance with applicable requirements
- Environmental review, where required by the lender or appropriate for the property
- Zoning and permitted use
See our guide to funeral home real estate.
5. Vehicles and Equipment
- Vehicle list, ages, condition and maintenance records
- Equipment used in preparation and services
- Any leased or financed vehicles or equipment that would need to be paid off or assumed
6. Crematory or Cemetery Operations
If the firm operates a crematory or cemetery, review permits, maintenance records, environmental compliance and any associated obligations. Our article on acquiring a funeral home with crematory operations covers the crematory side.
7. Staff and Continuity
- Licensed staff, roles and tenure
- Compensation, agreements and any restrictive covenants
- Which staff members families know and rely on
- Whether key staff intend to remain after the sale
8. Contracts and Relationships
- Supplier agreements and outstanding balances
- Arrangements with cemeteries, crematories or other providers
- Insurance policies and claims history
- Software, recordkeeping and data ownership
9. Reputation and Community
- How long the firm has served the community
- Public reviews and community involvement
- How much of the firm’s standing is tied to the seller personally
10. Items Your Lender Will Request
Lenders typically request many of the same records, plus the purchase agreement and your personal financial information. See our guide to funeral home loan requirements.
Using What You Find
Diligence findings may confirm the deal, change the price, add conditions to closing or lead you to walk away. Issues can be addressed through price adjustments, holdbacks, indemnities or other terms, subject to negotiation and lender requirements.
US Professional Funding works with buyers acquiring existing funeral homes. Learn more about our funeral home acquisition financing.
