Tampa, Fla. – It seems that the funeral home/cemetery acquisition market has a new player. What was speculated for months is moving closer to fruition as three former top executives at Keystone North America have formed a new company and are moving forward with the acquisition of the properties the Federal Trade Commission last month ordered divested by Service Corporation International in order to complete the company’s acquisition of Keystone.
The company, Foundation Partners Group, will be headed by Steve Shaffer, who will serve as president and chief executive officer. Shaffer was previously chief financial officer and co-founded Keystone in 1996. Jim Price, also a co-founder of Keystone and was its chief operating officer, is Foundation Partner’s executive vice president and chief operating officer; and Chris Thomley, who has served as Keystone’s chief accounting officer since 2005, becomes chief financial officer.
When reached for comment, Price said that the company has signed an agreement with SCI to acquire the properties mandated for divestiture. “Any further details would not be appropriate at this point,” he added. Price anticipates going through a review process with the FTC over the next several weeks, and if all goes favorably and according to schedule, the deal should become final in approximately 60 days.
In addition to the divested properties (see sidebar), Foundation Partners Group will also acquire Aldor Solutions as part of the transaction. Aldor Solutions, which provides funeral home software solutions, was acquired by Keystone in May 2009.
While the principals don’t want to comment any further on the deal just yet, industry observers see this as a positive move within the industry putting another buyer on the block.
“As far as I can tell, the company will be looking at a certain size business to fit their model,” said David Nixon, Nixon Consulting, Chatham, Ill. “It may create a possible alternative buyer for countless funeral home owners who want someone other than SCI or Stewart Enterprises to talk with in the sale of their business.”
Nixon added that Foundation Partners Group essentially could build to become the company that Price and other Keystone management wanted Keystone to be – but were cut short in the process by shareholder interests. “Time will tell if Foundation Partners Group can be as successful as they were at Keystone,” Nixon said. “It seems they might keep this one private or control the ownership a bit different than before.
“I really think that Foundation Partners Group can build a credible acquisition firm but they have to deal with funding and other start-up issues,” Nixon added. “They are not strange to the market but lending these days is not what it was.” According to Nixon, the funeral service sustainable growth rate was downgraded late last year to just 2 percent according to one outside rating firm (it was 3 percent for a number of years). Nixon is optimistic about Foundation Partners Group’s chances for success. “If anyone can do it, these guys can,” Nixon said. “As long as they stay within their comfort zone, they can become a solid player in the acquisition arena.”
Keystone enjoyed a strong reputation within funeral service for its service model. Bob Pierce, president of Pierce CFO, Tallahassee, Fla., agrees that Foundation Partners will be a fine addition to the funeral community. “Keystone worked very hard to deliver a serious quality of service,” Pierce said. “Jim Price and Steve Shaffer were an important part of that commitment. I am sure that Jim and Steve will continue to deliver the Keystone level of service.”
Bob Horn, who co-founded Keystone with Price and Shaffer in 1996, is thrilled for his former Keystone brethren with their new opportunity. “I am a huge fan of Jim Price and Steve Shaffer, we go way back,” said Horn, who retired as chairman of Keystone in 2008. “Jim, in my humble opinion, is the leading practitioner out there today as far as having a good feel for what our industry is all about and how to be successful in it,” Horn said. “We are in a relationship industry and everything kind of trickles down than that. Nobody has a better sense or feel for the importance of perpetuating those relationships with former owners, our local site management, rank and file employees, as well as giving back to the communities we serve. It is his strong point and forte and that will serve the new company very, very well.
“There is no doubt in my mind that will be the culture that they will build at the new company because that is Jim’s track record for the past 35 years,” Horn added. “Tie that up with the strong financial people and I think they will be very successful in building up a new consolidation company.”
When SCI acquired Keystone, Alan Creedy, president of Trust 100, was saddened because it took one of the best operators out of the options. “Jim Price is a key driver and one of the best innovator in this size company so I am delighted he will still be acquiring,” Creedy said. “This is likely to be a first rate firm and I expect them to do well.”
For Ernie Heffner, president of Heffner Funeral Homes & Crematory, York, Pa., the formation of Foundation Partners means that there will not be one less exit strategy option as the result of SCI acquiring Keystone. “Options are good for everyone,” he said. “SCI and Keystone are both solid industry name brands but in the end, for any company, it’s all about the people, their relationships with others and the respect they have earned. I think this ‘new company’ will really just be a different name under which familiar, well respected people will continue doing what they have been doing for years.”
This article originally appeared in the April 29, 2010, edition of the Memorial Business Journal. Visit www.memorialbusinessjournal.com
for information on how to subscribe.