The Mandate
A licensed funeral director acquiring an established practice from a retiring owner engaged Feasibility Study Consultant to prepare a third-party feasibility study supporting a SBA 7(a) financing request for a project located in DuPage County, Illinois. Total project capitalization fell within the $3M-$5M band. The capital provider, a regional bank participating in SBA 7(a), required documentation consistent with current program review standards. The analytical question put to the team: Did service-area mortality demographics and trailing-call volume support the acquisition multiple at 4.1x EBITDA.
Engagement Scope
- Primary market area defined as a 10-mile drive-time
- Comparable supply set of 8 properties
- Demand model framework: service-area mortality and call-volume retention analysis
- Financial projection horizon: 10 years
- Site inspection completed; operator interviews where applicable
- Primary data collection through field reconnaissance and third-party market data
Methodology Applied
Primary Market Area
The PMA was defined as a 10-mile drive-time from the subject site, calibrated to the demand catchment behavior typical of funeral services assets in Illinois. The boundary captured the population, employment, and competitive supply base relevant to the subject's operating thesis.
Supply and Demand Reconciliation
The comparable supply set comprised 8 properties operating within the PMA or in directly substitutable submarkets. Demand was modeled using a service-area mortality and call-volume retention analysis approach over a 10 years horizon. The reconciliation tested whether incremental supply, including the subject, could be absorbed within the projection window without compromising stabilized occupancy assumptions.
Capture Rate Calibration
The subject's capture rate was calibrated against the absorption capacity of the PMA. The analysis concluded that PMA absorption capacity exceeded subject build-out by a factor of 1.5 across the projection window, with a stabilized capture rate of 3.2%.
Exhibit 1: Comparable Supply Set, Illinois PMA
[Table or chart rendered in delivered report.]
Exhibit 2: Demand Projection Summary, 10 years Horizon
[Table or chart rendered in delivered report.]
Exhibit 3: Subject Capture Rate vs. PMA Absorption Capacity
[Table or chart rendered in delivered report.]
Analytical Conclusions
- Service-area annual deaths totaled 4,820 with the subject capturing 3.2% trailing-three-year share.
- Cremation rate of 64% supported the on-site crematorium revenue projection.
- Pre-need contract backlog of $1.4M provided multi-year revenue visibility.
- Year-three DSCR of 1.39x cleared the SBA 7(a) review threshold.
Deliverable
The delivered report ran 106 pages with 24 exhibits distributed across nine analytical sections, plus appendices documenting comparable supply data, demographic inputs, and financial projection assumptions. The document was prepared to the documentation standards of the regional bank participating in SBA 7(a). The corresponding SBA 7(a) review framework guided exhibit selection and supporting documentation.