Funeral home buyer due-diligence request list
By Jason Taken, Business Advisor, HedgeStone Business Advisors · Last reviewed · 7 min read
Send the seller a numbered request list the day the LOI is signed, grouped into eight areas: financials, calls and cases, preneed, licenses and Funeral Rule compliance, crematory and environmental, real estate and fleet, entity and legal, and people and contracts. Tier the requests so preneed and call data arrive first, because those findings move price most.
Key takeaways
- Number every request (3.2, not "preneed stuff") so the seller, the data room, and your tracking log all use one reference.
- Ask for outside proof rather than summaries: bank statements, trust statements, insurer confirmations, and signed arrangement statements.
- Tier the list. Financial, call, and preneed requests are due in the first 10 days; staff files and vendor contracts can follow.
- Your lender runs its own list. For an SBA buyer that includes a Phase I environmental review on any death care property with embalming or cremation on site.
This is the list you send, not the analysis you run. Copy it into your own letterhead, adjust the lookback periods to the deal, and send it the day the letter of intent is signed. Our funeral home due diligence guide explains what to do with each answer, and the buyer’s hub covers the full acquisition sequence.
How should a buyer use this request list?
Send it whole, but tell the seller which tier is due first. Ask the seller to upload each answer under its request number so nothing is filed twice or lost.
| Tier | Sections | Target after LOI | Why first |
|---|---|---|---|
| 1 | 1. Financials, 2. Calls and cases, 3. Preneed | Days 1–10 | These findings move price most often |
| 2 | 4. Licenses, 5. Crematory and environmental, 6. Real estate and fleet | Days 11–25 | Third-party reports need lead time |
| 3 | 7. Entity and legal, 8. People and contracts | Days 26–40 | Needed for drafting the APA and transition |
If the seller already built an indexed data room, map these numbers to its folders instead of asking for a second copy. Sellers who used our data-room index will have most items filed already.
1. Which financial records should you request?
Three years of history plus year to date, in a form you can tie to bank deposits. Summaries without bank statements cannot be tested.
Section 1: Financials
- 1.1 Federal tax returns, three years. The lender will verify them against IRS transcripts.
- 1.2 Monthly P&L and balance sheets, three years plus YTD. Shows trend and seasonality.
- 1.3 Bank statements, 36 months, every account. Proves reported revenue reached the bank.
- 1.4 Add-back schedule with support. Each line backed by an invoice, payroll record, or ledger entry.
- 1.5 Receivables aging and open insurance assignments. By case, with insurer and filing date.
- 1.6 Debt schedule and payoff contacts. Every loan, line, and lien to be cleared at closing.
- 1.7 Signed IRS Form 8821. Lets the lender pull business transcripts directly.
2. What call and case data should the seller produce?
Raw case-level data, not a summary chart. You want to rebuild the call count and revenue per call yourself.
Section 2: Calls and cases
- 2.1 Case list for each of the last three to five years. Case number, date, disposition, total charges, preneed flag.
- 2.2 Annual call reports as the seller prepared them. To reconcile against 2.1.
- 2.3 Trade, shipping, and wholesale cremation cases, listed separately. Prevents low-margin work from padding retail calls.
- 2.4 Every General Price List (GPL) version, three years. Dated, with casket and outer burial container lists.
- 2.5 Access to case files for a sample you choose. Statement, authorization, and deposit for each.
Expect gaps in older price lists. The FTC Funeral Rule at 16 CFR 453.6 requires keeping price lists only one year after their last distribution, along with each Statement of Funeral Goods and Services Selected. When the case list arrives, compare each year’s count with county death totals from the state vital records office. A firm whose calls held flat while local deaths rose has been losing share, and the case list is where you see it first.
3. What preneed documents must the seller provide?
Everything needed to climb The Preneed Reconciliation Ladder, from the register to outside proof of every balance. This is usually the slowest section to complete.
Section 3: Preneed
- 3.1 Complete register of open contracts. Number, purchaser, beneficiary, date, goods and services, price, guaranteed or not, revocable or not, funding type.
- 3.2 Trust statements, current plus the last three year-ends. From the trustee, not internal ledgers.
- 3.3 Insurer policy listings or confirmations. One per insurer, showing face value and current value.
- 3.4 State examination reports and correspondence. Including responses to findings.
- 3.5 Contract forms used, by year. Terms changed over time; old forms govern old contracts.
- 3.6 Cancellations, refunds, and trust withdrawals, three years. Each tied to a contract number.
- 3.7 The seller’s own reconciliation, if one exists. Useful as a starting point, never as proof.
Our preneed diligence guide for buyers explains how to sample and re-price these files.
4. Which license and compliance records should you ask for?
Current licenses for the firm and every licensed person, plus the records that show how the rules are followed day to day.
Section 4: Licenses and compliance
- 4.1 Establishment, branch, and preneed seller licenses. With renewal history and any conditions.
- 4.2 Roster of licensed staff. License type, number, and expiration date for each.
- 4.3 State board inspection reports, five years. With the firm’s responses.
- 4.4 Consumer complaints and regulator correspondence. Open and closed, five years.
- 4.5 Funeral Rule procedures. How phone price requests are handled, including after hours.
- 4.6 Formaldehyde monitoring results and training records. The OSHA formaldehyde standard requires exposure records to be kept at least 30 years.
Paper is half the test; our FTC Funeral Rule buyer audit covers sample calls.
5. What crematory and environmental records belong on the list?
Permits, equipment history, and anything that tells your environmental consultant where to look. Ask even if no crematory operates today.
Section 5: Crematory and environmental
- 5.1 Crematory license and air permit or state equivalent. Confirm it matches the equipment on site.
- 5.2 Retort make, model, install date, and reline history. Drives near-term capital needs.
- 5.3 Maintenance logs, three years. Gaps suggest deferred work.
- 5.4 Cremation authorization and chain-of-custody procedures. Plus a sample of completed files.
- 5.5 Trade cremation agreements with other firms. Volume, pricing, and termination terms.
- 5.6 Prior Phase I or II reports, tank records, spill history. SBA SOP 50 10 8.1 requires SBA lenders to start with a Phase I for death care properties regardless of loan size, unless no embalming or cremation occurs there.
For capacity and replacement math, see evaluating a crematory.
6. Which real estate and fleet documents should you request?
Ownership, condition, and permitted use of every parcel, plus a list of every vehicle that will transfer.
Section 6: Real estate and fleet
- 6.1 Deed, title policy, and survey for each parcel. Watch for parking or a crematory on a separate lot.
- 6.2 Zoning letter and certificate of occupancy. Confirms funeral and crematory use is permitted.
- 6.3 Prior appraisals. Context only; your lender orders its own.
- 6.4 Leases, including any with family members. Rent, term, renewals, and assignment clause.
- 6.5 Capital spending history and deferred maintenance list, five years. With contractor bids.
- 6.6 Vehicle list. Year, mileage, title holder, and service records for each.
7. What entity and legal documents should you request?
The papers your attorney needs to confirm who can sign, what is owed, and what claims could follow the assets.
Section 7: Entity and legal
- 7.1 Formation documents and good-standing certificate. Confirms authority to sell.
- 7.2 Ownership schedule. Every owner and percentage; family holders often surprise buyers.
- 7.3 Lien and judgment search authorization. Tied to the debt schedule in 1.6.
- 7.4 Pending or threatened claims, lawsuits, and board complaints. With counsel’s status notes.
- 7.5 Related-party arrangements. Family-owned buildings, vehicles, or services billed to the firm.
8. What people, contract, and insurance records complete the list?
Who works there, on what terms, and which outside agreements survive a change of owner.
Section 8: People, contracts, and insurance
- 8.1 Staff roster. Role, hire date, license, pay, on-call pay, and accrued time off.
- 8.2 Written agreements, handbook, and benefit plans. Including any unwritten promises, now written down.
- 8.3 Casket, vault, and urn supplier agreements. Rebates and change-of-control clauses.
- 8.4 Software, phone, website, and domain accounts. Who holds each login and license.
- 8.5 Insurance policies and five years of loss runs. Professional liability, property, auto, workers’ compensation.
How do you track what is still outstanding?
Keep one log and review it weekly with the seller’s point person. An unanswered request should never surprise anyone at closing.
- Record each request number, the date sent, who owns the answer, and its status: open, received, or follow-up needed.
- Log every follow-up question under the original number, such as 3.1a, instead of starting new threads.
- Share the log with your accountant, attorney, and lender so duplicate requests stop.
- Two weeks before the exclusivity deadline, convert anything still open into a price adjustment, an escrow, or a closing condition.
Your lender will add its own items, listed in our lender document checklist.
Frequently asked questions
When should a buyer send the due-diligence request list?
The day the letter of intent is signed, or within a few days. Exclusivity clocks start at signing, and preneed confirmations from trustees and insurers can take weeks to arrive. Sending a short preview before the LOI, limited to summary items, helps the seller start gathering without opening confidential files too early.
Is it rude to ask a family seller for this many documents?
Not if you explain why. Most owners have never sold a business and read a long list as distrust. Walk them through the tiers, point out that your lender requires much of it, and offer to accept existing formats instead of custom reports. Patience early keeps the relationship intact through closing.
What if the seller cannot produce something on the list?
Ask for a written explanation and the closest substitute. Missing old price lists can be partly rebuilt from signed statements; missing trust statements can be requested directly from the trustee with the seller's authorization. A record that cannot be produced or substituted becomes a price, escrow, or closing-condition discussion.
Should my lender and my accountant see the same documents?
Usually yes, through the same data room, so nobody works from an outdated version. The lender will also send its own requests, such as signed tax authorizations and appraisal access. Keep one master log that shows which party asked for each item and who has reviewed it.
Sources cited
- 16 CFR Part 453: Funeral Industry Practices — Electronic Code of Federal Regulations
- SOP 50 10 8.1: Lender and Development Company Loan Programs — U.S. Small Business Administration
- About Form 8821, Tax Information Authorization — Internal Revenue Service
- 29 CFR 1910.1048: Formaldehyde — Electronic Code of Federal Regulations