Illustrative example: a standalone crematory serving third-party funeral homes

What is a crematory worth when it owns no funeral home and serves only other people’s families? This page answers with an illustrative composite, not a real client deal. The owner, the customers, and every number are invented from patterns we see in trade crematories, then rounded so you can follow the math. The setting is a mid-sized metro area on the Great Plains; no real town or company is described.

The owner, 64, built the business over 22 years. It runs two retorts in an owned light-industrial building. Retort 1 is 17 years old, and Retort 2 is six. Four operators and drivers handle cremations, removals from hospitals and funeral homes, and a contract with a university body-donation program. The owner manages customers, scheduling, and compliance himself.

What did the crematory earn before adjustments?

About $194,900 of pre-tax income on $1,083,050 of revenue, an 18.0% margin. Trade cremations rose from 1,980 to 2,110 to 2,190 over three years.

Expenses totaled $888,150. The large lines were operator and driver payroll ($318,000), the owner’s salary ($120,000), gas and electricity at about $31 a case across 2,350 cases ($72,850), vehicles ($64,000), and maintenance and refractory repairs ($61,000). Depreciation was $74,000 and equipment-loan interest $19,000.

The body-donation contract deserved its own look. It renewed each year, required the university’s consent to assign, and paid less per case than trade work. The buyer counted its revenue but asked the owner to obtain the university’s written consent before closing, which took five weeks.

Which adjustments did the buyer accept?

The usual add-backs, plus one deduction the owner had not modeled: the cost of replacing his own work. The result was $357,700 of adjusted EBITDA, a 33.0% margin.

The buyer’s accountant tied each cremation to a permit, a cremation authorization, and an invoice, the same kind of testing described in our guide to quality of earnings for a funeral home. Volume tied out within two cases.

Where was the risk hiding?

In the customer list and the older retort. Neither showed up on the profit statement.

The largest customer had been bought the year before by a consolidator that runs its own crematory about 90 miles away. Large groups are also selling cremation capacity to independents; Foundation Partners Group’s February 2026 release announced Monarch Trade Services, offering trade cremation, embalming, and logistics at 24 locations in 10 states. A trade crematory’s customers have more choices than they once did.

The buyer’s downside case removed those 420 cases at an estimated $285 contribution each (the $395 fee less gas, variable labor, and van costs): 420 × $285 = $119,700. Adjusted EBITDA in that case: $357,700 − $119,700 = $238,000.

Capacity was the other test. We assumed practical capacity of about 1,450 cremations per retort per year on current staffing, an assumption rather than a manufacturer figure. Total cases of 2,350 ÷ 2,900 = 81% utilization, so losing Retort 1 for a reline would strain service for weeks. The reline was overdue, and a contractor quoted $72,000.

On air rules, the federal picture is thin. In its 2005 rule on other solid waste incineration units, EPA said human remains are not “solid waste” under that program and that any future regulation of human crematories would come under other authorities. In practice the permit to watch is the state one. Our guide to evaluating a crematory covers each check in depth.

What range did the assumed multiples produce?

About $1.54 million to $1.90 million in the base case and $1.02 million to $1.26 million if the large customer left. The multiples are assumptions for this illustration, not market statistics.

We know of no neutral published survey of crematory sale multiples. The only verified figure we cite is Carriage Services’ guidance on its Q4 2025 earnings call that it expected its future acquisitions to price at 7x to 9x EBITDA. A single trade crematory with one old retort and a concentrated customer list is a different asset, so we assumed 4.3x to 5.3x.

The building appraised separately at $610,000. Zoning and permits for cremation add value only to a buyer who will cremate there, the issue our page on specialty-use real estate appraisal explains.

How was the deal structured?

The buyer was a regional family group with five funeral homes that already sent about 300 cases a year to this crematory. It priced the business on the base case and shared the customer risk through an escrow.

1. Business price: $1,750,000 (about 4.9x base EBITDA), less the $72,000 reline, for $1,678,000.
2. Real estate: $610,000, at appraisal, closing the same day.
3. Contingent escrow: $300,000 of the business price held for nine months, released to the seller only if the largest customer signs a three-year trade agreement with the buyer. The gap between base and downside values at 5.0x was about $600,000; the parties split it roughly in half because the buyer planned to fill some capacity with its own cases.
4. Transition: the owner stays six months, paid separately, to introduce the buyer to every customer.
5. Non-compete: five years within 150 miles, with $30,000 of the price allocated to it.

A buyer that owns funeral homes is a natural fit for a crematory, but other funeral homes may hesitate to send cases to a competitor. Our comparison of funeral homes with and without a crematory explains why owners value capacity this way.

What did the owner net under each outcome?

About $1,532,360 if the escrow is released and $1,304,360 if it is not, from a total price of $2,288,000. Tax rates are assumptions; a CPA must run your facts.

Retorts and processors are depreciable equipment, and the gain on them up to past depreciation is recaptured as ordinary income under the rules in IRS Publication 544. The IRS capital gains topic sets 20% as the top rate on long-term gain and 25% on unrecaptured section 1250 gain. We assumed 37% on ordinary income and 4% state tax on all gain.

Run your own scenarios in the seller net proceeds calculator. Our guide to taxes on selling a funeral home covers allocation in more detail.

What should a crematory owner learn from this?

That a crematory’s value lives in contracts and records more than in steel. The owner could have protected about $300,000 by signing written, multi-year agreements with his largest customers before any of them changed hands.

The reline teaches a smaller version of the same lesson. Maintenance a buyer can see coming is deducted dollar for dollar, so doing it before the sale costs the seller nothing extra and removes a negotiating point. More of the method appears on our valuation hub.