Funeral home valuation multiples: SDE vs. EBITDA and why size, cremation, and real estate change everything

A multiple is shorthand for a buyer’s view of risk and growth. In funeral service it is also one of the most misquoted numbers in the business, because people trade figures without saying what the multiple is applied to.

This page is the technical reference. For a step-by-step owner estimate, start with how much your funeral home is worth. Both sit inside our seller’s guide.

What is the difference between an SDE multiple and an EBITDA multiple?

SDE includes one owner’s full pay; EBITDA deducts a market salary for whoever runs the firm. The same price therefore produces a lower multiple on SDE and a higher one on EBITDA.

Seller’s discretionary earnings answer an owner-operator’s question: what will the job and the business pay me together? Adjusted EBITDA answers an investor’s question: what does the business earn after paying someone else to run it?

Here is the conversion with illustrative figures. A firm shows SDE of $400,000. A buyer who will not work in the business must hire a manager and funeral director in charge at an assumed $95,000 including payroll taxes and benefits. Adjusted EBITDA is $305,000. A $1,400,000 price is 3.5x SDE and 4.6x EBITDA. Same deal, two very different-sounding multiples.

So when a buyer or another owner quotes a multiple, ask two questions before reacting. What earnings figure was it applied to, and which add-backs were accepted to reach it? A “5x” offer on SDE can be worth less than a “4x” offer on a broader earnings figure.

When do buyers use SDE, and when do they use EBITDA?

Buyers use SDE when the owner is the business and EBITDA once management exists apart from the owner. Size and staffing usually decide which applies.

The bands are rough. A 150-call firm in a growing suburb next to a consolidator’s cluster can draw buyers from the bottom three rows.

Which published multiples can you rely on?

Only one verified figure exists, and it comes from a buyer describing its own deals. Everything else is anecdote or unverified.

On its February 2026 earnings call, Carriage Services guided to 7x to 9x EBITDA for acquisitions it expects to close in 2026, adding that multiples have remained “pretty steady.” That figure describes firms a public consolidator chooses, after its own adjustments.

SCI does not disclose deal-level pricing. Its fiscal 2025 Form 10-K reports $101.3 million invested to acquire 22 funeral service locations and 2 cemeteries. Dividing that total tells you nothing about any one deal, because sizes vary widely. SCI estimates its own North American market share at about 18%, which leaves most firms with a smaller buyer.

A 2022 KFF Health News article quoted a CANA executive “hearing seven to nine” times, without a clear base. Treat it as a dated quote. Online rule-of-thumb tables we could not verify are left out on purpose.

Why don’t consolidator multiples translate to small firms?

Large buyers spread overhead, share embalming and crematory capacity across a cluster, and borrow cheaply. Those savings make the same EBITDA worth more to them. A buyer without those savings cannot pay the same multiple and still earn a return.

Why do multiples rise with firm size?

Bigger firms attract more buyer types, carry less key-person risk, and support cheaper financing. Small firms face a financing ceiling that caps the price.

The small-firm segment is large. In a Funeral Director Daily piece, Glenn Gould, working from NFDA’s count of about 15,500 firms in 2023, says 68% do fewer than 200 cases a year. Most of those buyers will use bank or SBA financing, so lender rules set the limit.

How do a crematory and the cremation rate change the multiple?

A crematory can lift the multiple by lowering outsourced costs and adding third-party revenue. Rising cremation lowers revenue per call, so buyers pay more for firms already built for it.

CANA’s 2026 statistics report puts the 2025 U.S. cremation rate at 62.8% and projects 69.1% by 2030. Each shift from burial to direct cremation shrinks average revenue per call. Buyers project that mix forward, so a firm with stable revenue per call despite the shift earns a better multiple than one riding a declining burial base.

Utilization matters as much as ownership. A retort running well below capacity is room a buyer can fill with trade cremations for nearby firms. One already near capacity may mean a second unit soon. The crematory itself needs proof: permits, maintenance logs, retort age, and utilization. Our guide to selling a funeral home with a crematory covers what buyers check.

Why must real estate be carved out before applying a multiple?

Earnings from a building you own bear no rent, so a multiple applied to them already values the building. Adding the appraisal on top counts it twice.

Buyers handle this two ways. Most deduct a market rent, apply the multiple to the lower earnings, and add the appraised real estate. Some apply one multiple to earnings before rent for the whole bundle. SBA lenders force the first method, because the SOP appraises real estate separately and excludes it from the business purchase price. Selling the business and the real estate compares structures.

Which method gives the seller more?

The two methods rarely agree, and the gap can be large. Take illustrative figures: EBITDA of $320,000 before rent, a market rent of $70,000, a building appraised at $800,000, and a 5x business multiple.

The carve-out wins here because the appraisal values the building at about 11.4 times its rent, while the business earns only 5 times. The result flips when a specialty building appraises low. SBA lists funeral homes with crematoriums as special-purpose property, and appraisers discount buildings with few alternative uses.

How much does the EBITDA figure itself move?

Often more than the multiple. Buyers and sellers argue over add-backs, and each disputed dollar is multiplied.

Suppose a seller presents adjusted EBITDA of $330,000 and the buyer’s quality of earnings (QoE) review accepts $290,000. It rejects an undocumented family salary add-back and a “one-time” repair that recurs every few years. At 6x, that $40,000 gap is $240,000 of price. Moving the multiple from 6x to 6.5x on $290,000 is worth only $145,000. Clean, supported add-backs protect value better than haggling over a half-turn.

Preneed is handled differently. Buyers do not apply a multiple to the backlog. They measure funding against today’s cost to deliver, then deduct any shortfall from the price.

What else pushes a multiple up or down?

Durability of earnings drives the rest. The Four-Number Funeral Home Valuation Screen captures the main factors: call-volume trend, average revenue per call by disposition mix, normalized earnings margin, and preneed funding ratio.