Tony, This was an interesting article and time will tell who is correct predicting the future. My observations of PE investments, regardless of what business they get into, is that they tend to destroy them. I'm sure there are exceptions, but "long-term investment" is usually 3-5 years and then they sell it. PE is about profit and often results in the folks at the bottom of the food chain being told to "do more with less". Again, I'm sure there are exceptions.
I’ll tell you, that’s my general take. There are lots of reasons to worry. In talking with Martel, though, I got the impression that they’re specifically funded for the long term. Because this is a sea change in the industry, there might be more patience.
Plus, pre-need sales, as I (barely) understand it, has serious cash flow advantages.
I’ll probably have more on this, but I’m starting to think in terms of whether these consolidators are banker-led or funeral director-led.
I’m anxious to see what happens at Foundation Partners.
Regarding PN and cash flow . . . many states require 100% trusting and the growth of those funds rarely keeps up with our rate of inflation, resulting in firms having to "discount" services at the time of need. Is PN an asset or a liability? What do I know as I'm just a simple, village undertaker. As far as FPG, I sold my firms to them just after their transition from Keystone. Aside from some really nice trips to Disney (IYKYK) it was a daily example of folks who knew little about funeral service proving they knew little about funeral service. I left at the end of my 5-year "consulting agreement".
Ha! I didn't even think about the trust states, that's a great point. On FPG, I was looking around and back in Novemeber, the CEO said they had to "stop buying EBITDA" which is my primary critique of private equity. I guess they weren't happy with that plan.
Most acquisition companies, to sort of hide underperformance of recent purchases, relied on buying revenue to pad the books. I was with with ECI and SCI twice, once by choice and once by acquisition, and that was not a secret.
Tony, This was an interesting article and time will tell who is correct predicting the future. My observations of PE investments, regardless of what business they get into, is that they tend to destroy them. I'm sure there are exceptions, but "long-term investment" is usually 3-5 years and then they sell it. PE is about profit and often results in the folks at the bottom of the food chain being told to "do more with less". Again, I'm sure there are exceptions.
I’ll tell you, that’s my general take. There are lots of reasons to worry. In talking with Martel, though, I got the impression that they’re specifically funded for the long term. Because this is a sea change in the industry, there might be more patience.
Plus, pre-need sales, as I (barely) understand it, has serious cash flow advantages.
I’ll probably have more on this, but I’m starting to think in terms of whether these consolidators are banker-led or funeral director-led.
I’m anxious to see what happens at Foundation Partners.
Regarding PN and cash flow . . . many states require 100% trusting and the growth of those funds rarely keeps up with our rate of inflation, resulting in firms having to "discount" services at the time of need. Is PN an asset or a liability? What do I know as I'm just a simple, village undertaker. As far as FPG, I sold my firms to them just after their transition from Keystone. Aside from some really nice trips to Disney (IYKYK) it was a daily example of folks who knew little about funeral service proving they knew little about funeral service. I left at the end of my 5-year "consulting agreement".
Ha! I didn't even think about the trust states, that's a great point. On FPG, I was looking around and back in Novemeber, the CEO said they had to "stop buying EBITDA" which is my primary critique of private equity. I guess they weren't happy with that plan.
Most acquisition companies, to sort of hide underperformance of recent purchases, relied on buying revenue to pad the books. I was with with ECI and SCI twice, once by choice and once by acquisition, and that was not a secret.