Analysts predict corporate buyouts

Joseph Zannino Jr. stands outside the viewing room of the home he and his wife, Maria, haveoperated for 45 years.

As sunlight streams through the stained glass windows, Zannino talks about the changes in the business since he graduated from mortuary school in 1947.

“We treat our families well,” said Zannino, nodding to his son, Charles, also a funeral director in the business. “All we have to sell is our service. It is what we do.”

The Zanninos are fortunate that they have relatives, notably Charles, poised to continue the business. That is not the case for all independents.

What has driven the funeral business for generations is that furniture dealers or livery operators would become undertakers and pass the business down through the family.

A boom in the profession hit after World War II. In 1943, a typical mortuary school had 15 graduates. In 1946, that number was 310. The G.I. Bill paid their way, said nationally known author and funeral consultant Todd VanBeck.

But in the 1990s the men in those post-war graduating classes were in their 70s, and many found themselves unable to interest their children in the business. For the first time, they had a generation gap.

That was when corporate funeral chains, with Wall Street and large amounts of capital behind them, stepped up to acquire the homes.

Ethical and financial missteps caused the chains to implode when Service Corp. Inc. of Houston became involved in a host of unethical practices in 1999, including recycling graves. The Loewen Group was hit with financial instability in the mid- to late-1990s when it tried to grow too quickly.

The war wounds from Loewen have been forgiven and forgotten. There will be new cash flows to the chains, said VanBeck, who worked for The Loewen Group, Covington, Ky., for 10 years.

Now is the time, VanBeck and other industry analysts said, independents should secure the next generation of management and become even more entrenched in the community. “Whether it is cremation or burial, personalization must be a part of it,” Phoenix-based industry expert Dan Isard said.

But even though many long-time funeral home owners might not have heirs ready to take over the business, there?s a new set of professionals who are entering the profession.

Mark Bailey of Rendon-Bailey Funeral Home became a funeral director after an injury forced him out of his first career. “We try to do things the way families want them,” Bailey says.

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