FSI Exclusive: Company Plans to Buy 23 Funeral Homes, 5 Cemeteries
A newly formed company, Foundation Partners Group, plans to buy 23 funeral homes and five cemeteries that were put up for sale as a result of a merger between Service Corporation International and Keystone North America, according to multiple sources.
Three key executives formerly with Keystone will lead the new company based in Orlando, Fla. The Federal Trade Commission must review and approve the purchase agreement. The deal was made after the FTC reviewed SCI’s deal with Keystone and ordered 22 funeral homes and five cemeteries with combined annual revenues of $19 million to be sold. SCI is selling those properties and one additional funeral home that is not strategic to its business.
The arrival of Foundation Partners Group and such a significant purchase signals an improving environment for mergers and acquisitions, says Dan Isard, founder of The Foresight Companies in Phoenix.
“We knew that (former Keystone Chief Operating Officer James Price) was starting this company whether he got this acquisition or not, and in the event they get this as you are reporting, it really starts them off with a very substantial revenue stream, and it also gives them the chance of creating some heat in particular markets,” Isard says. “They will certainly look at future acquisitions based on their merits, but they will be looking to expand their market segment in the areas in which they already own properties.”
Staff members at American Funeral Consultants in New Paltz, N.Y., agree that the formation of a new acquisition company has been highly anticipated and bodes well for funeral service. In a written statement, Melissa A. Drake, the company’s president and chief operating officer; and Kathy D. Williams, secretary, treasurer and chief financial officer, state, “Given the need to build a company that can operate more efficiently and profitably through clustered firms which will provide greater operating synergies, it is highly likely that Foundation Partners will look closely at additional opportunities on which they can build an even stronger base within these general market areas.” They add, “Thus, we would expect that Foundation Partners will begin to focus on controlled acquisitions of firms of certain call volumes with particular revenues in specific regions of the country. In such markets, it will translate to greater competition, not only for existing funeral homes and cemeteries operating within those areas, but also for individual buyers in those markets who have seen little contest over the last few years.”
While none of the former Keystone firms that are being acquired responded to our calls seeking comments, Isard bets that as this news circulates, plenty of people will be happy. “There were a lot of Keystone managers at the NFDA convention who went because they had already been scheduled to go,” he says. “And there were a lot of droopy faces. Some of them were our former clients who were upset that the sale to SCI had taken place.” He adds, “But the next emotional crest came when the divestiture list came out and former owners and managers saw they were up for bid, and many of them were actually happy they were on the list because they were hoping that this new company was going to be
the acquirer.” Isard speculates that Foundation Partners will continue with an operating philosophy that allows any manager at any location to pick up the phone to contact the company president.
Who Will Lead Foundation Partners?
Price will reportedly serve as executive vice president and chief operating officer of Foundation
Partners Group. The company will be led by President and Chief Executive Officer Steve Shaffer, who was formerly chief financial officer at Keystone. Both Price and Shaffer were co- founding partners at Keystone. They will be joined by Chris Thomley, formerly chief accounting officer at Keystone, who will serve the company as chief financial officer.
Isard gives Price and Shaffer high marks for their work in funeral service. “Jim Price under- stands acquisitions and knows how to assimilate acquisitions,” he says. “The Key Memories brand name that he incorporated into the Keystone philosophy was brilliant, and it intended to create consistency of quality in the level of service families received through the Keystone system.” He adds, “I think this really drove a consistency of value throughout the Keystone system.”
Drake and Williams agree. “We have had the opportunity to work with Jim Price and Steve Shaffer in their capacity with Keystone Group on several transactions over the years and are familiar with the high quality and diligence of their work,” they state. “AFC has always held Keystone Group Holdings in high regard within the industry, and Price and Shaffer
played key roles along with Steve Tidwell, Will Bischoff, Chris Thomley, Jim Starks, and other key members of the Keystone organization.”
Drake and Williams expect Foundation Partners Group to do well. “Both Price and Shaffer are highly regarded in the industry, and it is anticipated that they will have great success,” they state. “While Chris Thomley may be less known, he has proven his level of expertise in the Keystone organization and undoubtedly will be a true asset to the new company.”
Drake and Williams add that the mix of former Keystone and SCI funeral homes and cemeteries to be acquired by Foundation Partners Group appears to consist of strong, viable firms and should provide the company with a great base to build on.
Editor’s Note: We contacted Service Corporation International to comment on this story, but the company did not respond in time for publication. SCI reports earnings April 29, so be sure to review the company’s earnings release to see if it includes any commentary related to Keystone and its divestitures.