5 Minutes in the Lower Middle Market
5 Minutes in the Lower Middle Market is a short daily podcast on the best ideas, lessons, and signals in the world of small business acquisitions, holdcos, private equity, and operating companies. In five minutes or less, it helps buyers, operators, and investors get sharper on what actually matters in the lower middle market.
5 Minutes in the Lower Middle Market
How a Funeral Home Company Sold for $1 Billion
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In today's 5 Minutes in the Lower Middle Market, we break down the story of Tribute Technology.
What began as a simple website business serving funeral homes evolved into a comprehensive software platform used by thousands of customers across the deathcare industry, ultimately leading to a reported $1+ billion acquisition.
The key lesson: some of the biggest opportunities aren't found in the hottest industries—they're found in overlooked, mission-critical niches where customers have recurring needs and few alternatives.
Timestamps:
0:00 Introduction
0:24 The Origin of Fraser Consultants
0:53 Why Funeral Homes Are an Attractive Market
1:53 The Creation of Tribute Technology
2:17 Reaching Massive Scale
2:43 The Category Strategy Playbook
3:03 Applying the Lesson to Traditional Businesses
Welcome to five minutes in the lower middle market, where I break down the best ideas about buying, building, and owning small businesses. And this one today, very special and shows you that in the lower middle market there are so many special opportunities in markets many people don't know even exist. And today's story is about Matt Fraser and Tribute Technology. What's interesting is that Fraser started Fraser Consultants back in 2003, originally building websites for funeral homes. And over time, that expanded into a broader software and services platform for the deathcare industry overall. Tribute Today describes itself as an operating system for funeral homes and crematation businesses. At first glance, funeral homes sound like a very like odd niche, but from a business standpoint, it's actually very smart vertical. It is a large, recurring, emotionally important market. The broader funeral home industry has been estimated around 28 billion, and software in that would touch critical workflows like websites, obituaries, payments, memorial products, marketing, and case management. The very first lesson pick a boring market, but make sure it matters deeply to the customer. Fraser did not try to build broad software for everyone. He went super deep in one vertical. First websites, then payments, then marketing, then memorial products, then more software and more workflow. Again, very useful lower middle market lesson, and a lot of people I would say spread too wide too early. The better move is to often to go narrow, understand the workflow very deeply, and then simply keep adding products around the same customer. Now, the second phase of this story. In 2018, Provence Strategic Growth acquired funeral tech businesses, including Frontrunner Professional and Fraser Consultants, to form Tribute Technology. And Tribute later added also Ad Perfect. In 2020, Carlisle and Vista agreed to acquire tribute from Provenance from more than 1 billion. One report said Tribute reaches more than 9,000 funeral homes, or roughly 40% of the US market. Another industry report said more than 70% of US funeral homes used at least one of the platforms inside the product tribute umbrella. Those are slightly different ways of measuring reach, but either way, you get the overview and the scale, and that has become significant. Anyway, all this it's not just a software story, it's a category strategy story where you can pick a vertical that is boring enough to be overlooked, make the product essential, go deeper instead of wider, own more of the workflow, then if the opportunity is big enough, consolidate around it. That logic works in software, but again, it also works in traditional businesses. It works in HVAC, it works in testing and inspection, it works in speciality distribution, it works in niche healthcare services, it works anywhere customers have recurring pain, fragmented providers, and a strong need for reliability. Again, if I had to pull one lesson from tribute technology, it would be that the big money is often not in chasing the hottest market. It is in dominating a very boring and niche one. So that's it for today's five minutes in the lower middle market. Talk to you again in the next episode.