How much is my funeral home worth? A practical valuation guide for owners

Most owners first ask this question after a letter arrives from a buyer they did not call. The answer they need is not one number. It is a range they can defend, built from figures already sitting in their own books.

NFDA’s media-center statistics count 15,401 funeral homes in the U.S., about 75% family or privately owned. Very few of those owners have ever seen a valuation of their own firm. This guide gives you a first estimate in an afternoon. It belongs to our guide to selling a funeral home, and it does not replace an appraisal.

What is the basic formula for a funeral home’s value?

Business value equals normalized earnings times a multiple, plus real estate you are selling, minus preneed shortfall and other price adjustments. Each part is measured separately, then added up.

1. Normalize earnings. Recast three years of profit into seller’s discretionary earnings (SDE) or adjusted EBITDA, with documented add-backs and a market rent charge.
2. Choose a multiple range. Pick a low and a high multiple that fit your size, call trend, and risk. Test both ends.
3. Multiply. Earnings times each multiple gives a range for the operating business.
4. Add real estate. Use an appraised value for land and buildings the buyer will purchase.
5. Subtract adjustments. Deduct any preneed trust shortfall, plus agreed credits for deferred maintenance or a worn-out fleet.

How do you find your real earnings?

Start with pre-tax net income from your tax returns or statements, then add back what a new owner would not pay. The add-backs must be provable, because a buyer’s accountant will test every one.

Common add-backs include one owner’s salary, health insurance, and vehicle; interest and depreciation; and true one-time costs such as a roof replacement that was expensed. Family members on payroll get adjusted to market pay, up or down. A relative paid $60,000 for part-time work is an add-back; a spouse who works full time unpaid is a deduction. Our guide to funeral home add-backs that buyers accept covers the gray areas.

One adjustment trips up most owners. If you own the building and pay no rent, your profit looks larger than a tenant’s would. If you plan to value the real estate separately, you must first subtract a market rent from earnings. Otherwise the building is counted twice.

What multiple should you apply?

Use a range, not a single figure, and treat any published number with caution. No neutral survey of funeral home sale multiples exists that we can cite.

The only verified figure comes from a public buyer. On its Q4 2025 earnings call in February 2026, Carriage Services said it expected deal multiples of 7x to 9x EBITDA for its planned 2026 acquisitions. That is one consolidator’s guidance for firms it chooses to buy, measured on EBITDA. It is not a market average.

A 2022 KFF Health News investigation quoted a CANA executive saying homes once sold for “three to five times their annual revenue” and that she was now “hearing seven to nine.” The wording mixes revenue and earnings, so read it as a dated signal that prices rose, not as a formula.

In our experience, single-location independents priced on SDE usually land in the low-to-mid single digits. Larger firms with management in place, priced on adjusted EBITDA, sit higher. Why multiples move with size, cremation, and real estate is the technical companion to this page.

Where in the range does your firm fall?

The Four-Number Funeral Home Valuation Screen places a firm within its range using four figures, always in this order.

How does owned real estate change the number?

Real estate adds its appraised value on top of the business value, after earnings have absorbed market rent. Buyers and lenders treat the building as a separate asset with its own appraisal.

SBA lenders make this split formal. Under SBA SOP 50 10 8.1, effective October 1, 2026, real estate is excluded from the business purchase price and appraised separately. A buyer financing with an SBA 7(a) loan will show you that split whether or not you planned for it.

Small firms should look hardest at this choice. A Funeral Director Daily report quotes Glenn Gould citing NFDA’s estimate that 30% of firms do fewer than 100 cases a year. It covers an argument that low-volume firms may realize more by selling the real estate apart from the operations. Our guide to selling the business and the real estate compares the three structures.

How much does a preneed shortfall subtract?

A shortfall comes off the price dollar for dollar. It is the gap between what your trusts and insurance policies hold today and what it would cost to deliver every guaranteed contract at today’s General Price List (GPL).

The Preneed Reconciliation Ladder walks from a complete contract register to that single gap figure. Buyers will run it in diligence. Running it first means you choose the number to defend, instead of reacting to theirs. What happens to preneed in a sale explains escrows and indemnities.

What other deductions show up in an offer?

Buyers also price the spending they expect in year one. A hearse past 200,000 miles, a failing roof, or a prep room due for ventilation work each become a credit or a lower multiple. So does owner dependence. If you are the only licensee, a buyer must hire a funeral director in charge at market pay, and that salary comes out of the SDE you counted. Write these items down before a buyer does. A list with repair quotes keeps a $40,000 fix from turning into a $150,000 negotiation.

Why might real offers land above or below your estimate?

Offers move with who is buying and how they pay. The same earnings support different prices for different buyers.

A licensed director using an SBA 7(a) loan is bound by lender math. The SOP requires a 1.25 debt-service coverage ratio for most acquisitions and caps total debt at the business valuation, so the price stretches only as far as cash flow covers payments. A consolidator with cheaper capital can pay more for the same earnings, sometimes in a mix of cash, earnout, and consulting pay. Compare the cash and terms, not the headline.

Use the funeral home valuation calculator, shown below on this page, to test your own figures at both ends of a range.

When do you need a formal valuation?

You need a credentialed valuation for estate and gift planning, partner buyouts, disputes, and any SBA-financed sale. For a first look at whether selling makes sense, your own estimate is enough.

For SBA deals, the SOP requires the lender to order the valuation from a credentialed source (ASA, CBA, ABV, CVA, or BCA). It cannot rely on one prepared for the buyer or seller. The lender may value the business itself only when the business price is $350,000 or less and the parties have no close relationship. At a purchase price of $3 million or more, a quality of earnings (QoE) review is also required.