Illustrative example: a three-location regional group sold to a PE-backed platform

Two siblings, each owning half, ran three funeral homes their grandfather had assembled across neighboring counties in the Ohio Valley. One wanted to retire; the other wanted to keep working but not keep borrowing. What follows is an illustrative composite, not a real client deal: the family, firms, and platform are invented, and every number is made up to show how a multi-location sale to a private-equity-backed platform is priced and paid.

What did the three locations look like?

Together they served 1,000 calls and produced $6.4 million of revenue. The flagship carried the group; the smallest location barely paid for itself.

Location C produced 17% of calls but about 6% of location-level earnings. Its building was leased from an unrelated landlord, its funeral director in charge was the retiring sibling, and its families drove past Location B on the way to the cemetery. The platform wanted it anyway, for the territory and the staff, but priced its earnings with clear eyes.

How did adjusted EBITDA move from the seller’s schedule to the QoE?

The siblings’ own schedule showed $1,569,000. The platform’s outside quality of earnings accepted $1,436,000. Every line in both columns is shown below.

The last two lines are where sellers most often lose money. The trust income was real cash, but it was a catch-up of earlier years’ earnings, not something that would repeat. And the retiring sibling had been doing two jobs, manager and director in charge at Location C, for one salary. Our guide to quality of earnings for funeral homes explains how reviewers test each of these, and the definition of adjusted EBITDA covers why market rent and market pay come out first.

What valuation range did the platform’s numbers support?

On an assumed 6.5x to 7.5x adjusted EBITDA, the group was worth $9.33 million to $10.77 million before preneed. The parties settled at 7.0x, or $10,052,000. These multiples are assumptions for this composite, not market statistics.

The one verified reference point we cite is public. On its Q4 2025 earnings call, Carriage Services guided to 7x to 9x EBITDA for its own planned acquisitions. That is one consolidator’s target range, not a rule for platforms. Competition matters too: Funeral Director Daily named the “Rise of the Regionals” its 2025 business story of the year, noting that regional buyers had expanded credit facilities and equity partners. And the field remains fragmented; SCI’s FY2025 10-K estimates its own North American market share at about 18%.

The platform expected savings the family could never capture on its own: casket and vault purchasing at group prices, a shared care center, and one accounting team across dozens of homes. It did not pay for those savings, and it should not be expected to. The seller’s job was to make sure every dollar the business already earned was counted once and documented, so the multiple applied to a number nobody could reopen.

How was the deal structured?

The platform paid $7,967,000 in cash and $2,000,000 in rollover equity in its holding company. The price was cash-free and debt-free, with a normal level of working capital delivered at closing.

1. Cash at closing: $7,967,000, of which $400,000 sits in an indemnity escrow for 18 months.
2. Rollover equity: $2,000,000, about 20% of the price, split equally between the siblings. Our guide to rollover equity in a funeral home sale covers share classes and exit rights.
3. Real estate: the family company kept buildings A and B and signed 15-year leases at the $228,000 market rent. Our comparison of selling the real estate versus leasing it weighs that choice.
4. People: the continuing sibling signed a two-year employment agreement at $150,000. The family names stay on all three buildings for at least five years, written into the purchase agreement and binding on successors, the tests in The Legacy Terms Ledger.

How long did the sale take, and what slowed it?

About 15 weeks from signed letter of intent to closing. The QoE, not the lawyers, set the pace, and the slowest single item, Location C’s paper preneed register, was work the family could have finished before going to market.

1. Weeks 1 to 6: quality of earnings. The reviewer tied three years of call reports to revenue at each location and rebuilt payroll by person. The trust income question at Location B alone took two weeks of statements.
2. Weeks 3 to 8: preneed. Every contract was matched to its trust account or policy, then re-priced at today’s GPL. Location C’s register was on paper.
3. Weeks 6 to 12: licensing and leases. Establishment licenses and the director in charge for each location had to be in place for the new owner under each state’s rules, which vary; the platform hired Location C’s new director in week 9. Lease drafts for buildings A and B went back and forth three times.
4. Weeks 12 to 15: closing. The working capital target was set at the trailing 12-month average, and the purchase agreement, escrow agreement, and holding company documents were signed together.

Why Location C still mattered

On its own, Location C was worth about $95,000 × 7.0, or $665,000, less than its share of calls suggests. But it kept a competitor out of the cemetery corridor between the other two locations, and two of its staff covered weekend removals for the whole group. A platform buying territory pays for that, which is why the siblings sold it inside the package rather than separately.

What did the siblings net after debt and taxes?

About $4.41 million in cash between them, or $2.21 million each, on assumed rates. The rollover is excluded because it is not cash.

We assume, as a simplification, that all taxable gain falls on the cash and that the rollover is structured to defer tax. A contribution of property to a partnership for an interest in it is generally tax-free under 26 U.S.C. §721, and the deferred gain comes due when the rollover is sold. Whether your rollover qualifies depends on the platform’s structure; talk to your CPA and attorney before the letter of intent is signed.

What is the lesson from this example?

In a sale priced on a multiple of adjusted EBITDA, the add-back schedule is the price. A $133,000 earnings gap became a $931,000 price gap, and none of it was negotiable once the platform’s reviewer had the documents.

The siblings could have narrowed that gap with their own review a year earlier: reserving for relines, hiring the Location C director before the sale, and separating trust income catch-ups. Then read the cash and the rollover as two different things. The cash is $4.41 million and, apart from the escrow, certain. The rollover is $2 million of hope that depends on the platform’s debt, its exit, and its management; if the shares are worth 1.5x in five years, it pays $3 million, and at 0.6x, $1.2 million, before tax. Our profile of the private equity platform buyer and the valuation, finance, and tax hub cover both halves.