Profiting From Death: Private Equity’s Control of Funeral Homes and the Cremation Boom

The Quiet Transformation of the American Funeral Industry

The way we say goodbye in America, it’s changing in a really fundamental way. And it’s not just about more people choosing cremation.

No, not at all.

From Family-Owned Funeral Homes to Financialized Death Care

We’re talking about the biggest structural shift in the American death care industry in I mean probably a century. This has always been a world of local family-run businesses. And now it’s not. It’s being driven by finance. And today we’re going to do a deep dive into one of the biggest players behind that shift. Foundation Partners Group or FPG.

Right. They’re the second largest private provider of these services in the country. Only Service Corporation International is bigger and they’re a massive public company.

So our mission today is to really pull back the curtain on FPG’s strategy. It’s a classic private equity buy and build model

And we want you to understand what this this financialization of grief really means for your family, for the costs, the choices, and maybe what you don’t see when you’re at your most vulnerable.

To get there, you have to understand the core problem they exploited. The whole traditional funeral model, you know, the expensive caskets, the embalming, all of it. That model was collapsing.

It was an economic collapse that created a vacuum.

And private equity loves a vacuum.

Why Cremation Changed Everything

So, the single biggest driver here was the move to cremation. I mean, the speed of this shift is just incredible.

It really is. When FPG started in 2010, the cremation rate in the US was sitting at around 40%.

And today in 2024,

it’s over 60%. And in some key markets, they expect it to hit 80% in the next decade or so.

The Economic Collapse of the Traditional Funeral Mode

That’s a huge cultural change. But what did that do to the bottom line of, you know, the local funeral home on the corner?

Oh, it was a catastrophe for them. It completely compressed their revenue. Think about it. A traditional burial service that could bring in seven, eight, maybe $10,000.

And most of that profit was in the casket. Right.

Exactly. The high margin merchandise. Now compare that to a direct cremation. No embalming, no viewing, no expensive casket.

What does that bring in?

Often less than $2,000. And in some cities, you know, where it’s really competitive, it can be under a $1,000.

Wow. So your revenue per family just gets decimated overnight.

Absolutely. The math is just brutal. Suddenly you need to handle three, four, maybe even five cremations just to make the same revenue you made from one burial a decade ago.

And most small businesses just aren’t built for that kind of volume. They can’t scale that quickly.

Why Independent Funeral Homes Became Private Equity Targets

No, they can’t. So, you have this situation where about 80% of the 19,000 funeral homes in the country were independent,

and they were struggling.

They were cash flow poor, but they were asset rich. They own the building, the land, the cars, and so many of them had no one in the family to take over, no succession plan.

That sounds like the perfect target for a private equity rollup.

It’s the textbook definition.

Yeah.

How Private Equity Funeral Home Rollups Actually Work

FPG comes in and buys these businesses for a pretty low multiple. We’re talking maybe four to six times their annual earnings, their EBITDA.

Okay, so break that down for us. What’s the arbitrage play there? How do they make money just by buying them up?

It’s pretty simple, actually. Think of it like this. FPG is buying up individual locally-owned antique shops for a wholesale price.  Each one on its own isn’t worth that much to a big investor. But once FPG owns a hundred of them, they’ve created a national professional, highly efficient retail chain. That chain is suddenly way more valuable. So it commands a much higher multiple maybe 10 or 12 times EBITDA.

So they create value just by consolidating just by rolling them all up under one corporate roof.

Exactly. It’s a pure financial play. They saw a crisis and capitalized on it.

Foundation Partners Group: The Buy-and-Build Strategy

Yeah. So let’s get into FPG’s actual origin story. They were founded back in 2010 backed by a firm called Sterling Partners.

And their core idea, their thesis was actually really smart. They saw that the whole industry was as they put it “underprepared for the cremation wave.”

So they decided to lean into it, not fight it.

Precisely. And that shaped their whole strategy. They wanted to build a much lighter asset base than their big competitors.

What do you mean by lighter?

Well, think about a giant like SCI. They own tons of cemeteries. And cemeteries are incredibly expensive. All that land, the maintenance, the perpetual care funds, it’s a huge capital drain.

So FPG just avoided them.

Building a Cremation-First Funeral Company

They did. They focused on the service centers and the crematories themselves. They wanted to be nimble and capital efficient for an age of cremation, not burial.

And they also tried to add some value back into what was becoming a low-cost service. I read about something called share life

Right.  That was one of their early innovations. Yeah.

A proprietary tech platform to create, you know, better memorial videos and digital tributes, an attempt to add a premium touch to a commodity.

But the really big shift, the pivotal moment seems to be in 2015 when a firm called Access Holdings took over.

It was. And what’s fascinating is that Access was founded by Kevin McAllister who was an executive at Sterling and helped create FPG in the first place.

So he saw the potential and basically bought his own creation back.

Yes. And that totally changed the game. FPG went from being a standard portfolio company, you know, that would be sold in a few years to being a long-term aggressive platform. Access saw them as a vehicle to disrupt the entire industry.

And for that kind of long-term disruption, you need a ton of capital.

The Role of Capital: Access Holdings and the $500 Million Reload

So by 2021, Access had a problem. They’d held FPG for 6 years, which is a long time in private equity.

Right.  Their investors wanted a return, but instead of selling the whole company, they did something really sophisticated. They created what’s called a continuation fund.

Okay, that sounds complicated. They created a new fund to buy the company from themselves.

That’s essentially it. That’s a brilliant move. They brought in a big investor, Caller Capital, to lead a deal worth almost $500 million.

So, how does that work? Who gets the money?

It allows the original investors who want out to cash out their shares at a new higher valuation, but and this is the crucial part, it allows Access and any new investors to pour hundreds of millions of new capital into FPG to go on a buying spree.

So, it was a way to reload the cannon without actually having to sell the company.

Exactly. And that half a billion dollars is what fueled their massive growth from 2021 to 2023.

And with all that cash, they could be very specific about what they bought.

Very. They weren’t looking for, you know, the fancy old line funeral homes that specialized in $1,000 caskets. They wanted firms that had already figured out how to do high volume cremation efficiently.

It was all about volume and scale.

The Density Model: Scaling Cremation Through Centralization

All about it. And this feeds right into their core strategy, what they call the density model,

which is all about building up clusters. They’d go into a high cremation market like in the Sunb Belt, Florida, Arizona, Nevada, and just try to achieve total saturation.

The density is all about efficiency. I mean, if you buy 10 funeral homes in say a 20 mile radius of a city, you don’t need 10 expensive crematories.

You just need one.

You just need one large industrial scale crematory that can service all 10 of those storefronts. It slashes your operating cost per cremation.

And they had a two track approach to building that density. Right.

They did. First, you have what are called platform acquisitions. These are the big fish.

Give us an example.

Platform Acquisitions vs. Tuck-In Funeral Homes

The best one is probably Baldwin Brothers in Florida. In 2021, FPG bought them. They had 20 locations. It gave FPG instant dominance. in central Florida which is a huge and growing cremation market.

Okay, so that’s the platform. What’s the other track?

Then come the tuck in acquisitions. Once you own the big platform like Baldwin, you start buying up the small single location homes all around it like Angel Valley or a Adair Dodge in Tucson.

And you just fold them into the centralized operation.

You fold them in, shut down their inefficient backend and run everything through your main hub. It’s incredibly effective.

And the scale of this is just it’s historic for this industry.

From Local Funeral Homes to High-Volume Cremation Machines

It is they went from under 40 locations in 2015 to more than 250 today across 21 states and they serve I think between 115 and 150,000 families a year.

Which is why they call themselves the second largest provider of services. It’s not about the number of rooftops, it’s about the number of families, the volume.

And this is where we have to talk about the friction.

What Consolidation Means for Cremation Prices

What does this model actually mean for you the consumer?

Right? Because all of this, the debt, the acquisitions, the returns for investors That has to be paid for somehow.

And it is. Groups like the Funeral Consumers Alliance have documented a really consistent pattern of significant price hikes right after an FPG acquisition.

Case Study: Price Increases After Private Equity Acquisition

The case study in Tucson is pretty shocking. They bought a place called Angel Valley Funeral Home in 2019.

What happened to the prices?

Before the sale, a direct cremation cost $425. After FPG took over, that price jumped to $760.

Wow. That’s nearly an 80% increase. an 80% increase for the exact same basic service.

And this is where they run into conflict with consumer groups. A lot of these nonprofits negotiate discounts for their members with local homes.

And FPG comes in and cancels those deals.

Almost always. They argue the discounted rates are unsustainable for their corporate model. They need those higher margins.

But maybe the most controversial part of the whole strategy is the branding. What some people call the mom and pop illusion.

The ‘Mom and Pop’ Illusion and Lack of Ownership Transparency

It’s a deliberate strategy. When they buy Jones family funeral home, They don’t rebrand it. The sign stays the same. The website looks the same. Everything looks local.

But it’s owned by a corporation in Florida.

It’s ruthless. But from a business perspective, it’s brilliant. They’re buying generations of community trust and goodwill. They can’t just throw that away.

And they often keep the old owners on as paid consultants for a while to complete the illusion of continuity.

They do. And it works because it’s so hard for a grieving family to figure out who actually owns the business.

The corporate ownership is usually buried in some LLC filing somewhere. You’d never know. You’re dealing with a private equity backed national chain.

And that lack of transparency feels I mean it feels deceptive.

It’s a huge point of criticism for sure.

Inside the Corporate Funeral Home Workplace

Another really interesting piece of the FPG story is the constant churn in the CEO’s office. You see five different CEOs in a pretty short amount of time.

That’s not a sign of instability, though. That’s a classic private equity move.

What do you mean?

They change the leader to match the stage of the investment. You need a visionary at the start. Then you need a hardcore operator to integrate all the acquisitions than maybe an innovator. Each phase of the rollup requires a different skill set at the top.

And that churn must create some cultural friction inside the company.

KPIs, Sales Targets, and Cultural Friction

Immense friction. You read employee reviews and it’s a constant theme. You’re taking these fiercely independent funeral directors, people who see themselves as serving their community, and you’re dropping them into a corporate structure.

Suddenly they have KPIs and sales targets. Exactly. Sales targets for high-end earns, efficiency metrics handed down from an office a thousand miles away. It leads to a lot of burnout.

Death Tech and the Shift to Online Cremation

But FPG is also looking beyond just physical funeral homes. They’re investing heavily in what people are calling death tech.

This is their omni channel pivot. They don’t just want to be a service chain. They want to be a tech platform that captures you at every point in the end of life journey.

Capturing the Consumer Before Death Occurs

So in 2019, they bought Tulip Cremation.

Right. Tulip is a totally online direct to consumer cremation company. It’s for the person who wants to arrange everything from their laptop and bypass the physical funeral home entirely.

And then just this year, 2024, they bought Cake [joincake.com].

Cake is a huge end of life planning website. This is FPG moving upstream. They want to engage with you years before a death even occurs.

So Cake becomes a giant lead generation machine for their other services.

A massive one, which by the way tells you everything about their new CEO, John D. Smith. His background is from companies like Icon Parking and Aaron’s Rent to Own.

That’s a fascinating background. What’s the through line there?

It’s about managing huge decentralized networks of physical locations, parking garages, rental stores, and driving revenue through high volume and efficiency. It’s industrial logic applied to death care.

The end goal is to capture the consumer everywhere. Whether you walk into a storefront, you do a Google search for cheap cremation, or you’re just reading an article about planning your will.

They want to maximize their share of wallet for every single death.

The Industrial Future of Death Care

So if you take a step back, FPG really does look like the industrialized future of this industry. They made the right bet on cremation and they used private equity to scale faster than anyone thought possible.

But that success comes with a huge trade-off for the consumer. You lose that local pricing and you lose transparency.

And I think that leaves us with the central tension here.

It does. FPG’s entire model depends on extracting every last bit of efficiency that private equity demands while at the same time trying to project that warm owner friendly local reputation that they bought for you for the American family. It means the path to saying goodbye is moving away from the village undertaker you trusted.

What Families Lose in a Financialized Funeral System

And it’s moving toward a centralized financialized corporate machine,

and you have to ask yourself is the convenience of the new model worth the potential cost and the loss of that local connection?

DFS memorials, affordable cremations nationwide.

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