Last of Foundation Partners Group Founders Exit
This article originally appeared in the September 12th Issue of the Memorial Business Journal
Jim Price and Steve Shaffer have re-signed their positions as executive vice presidents of Foundation Partners Group – the company they helped found just over three years ago.
Price, who also resigned his seat on the company’s Board of Directors, said the resignations were effective September 6 but both he and Shaffer would continue on as investors in the company.
The resignations come nearly a year after a major restructuring of senior management orchestrated by the board of directors and Sterling Partners, a Chicago-based investment firm, that has a sizable stake in FPG.
Now all four of the original founding partners have left the company.
Price did not offer any reason behind his resignation other than to write in an email, “Just seemed like the thing for me.”
Shaffer, who is part of the board of trustees for the Funeral Service Foundation, emailed other board members. He assured them he would remain active with the Foundation and fulfill his commitment; and he intends to stay active in funeral service.
Brad Rex, president and CEO of Foundation Partners, noti- fied his team of the change in an email that was sent Monday morning. Rex said that in the interim he would lead the com- pany’s acquisitions efforts.
“Today I share with you that Jim Price and Steve Shaffer have made the personal decision to leave the company, effective immediately,” Rex said in the email. “As you all know, Jim and Steve have made a huge mark on our lives and the funeral in- dustry as a whole, successfully leading the organization through a time when an entire generation of baby boomer attitudes were rapidly changing and the industry faced several significant chal- lenges.
“We are very thankful for Jim and Steve’s contributions over the past three years. They leave a legacy of teaching and build- ing the core principles of funeral expertise and operational ex- cellence–and, of course, Jim has made his mark as a mentor to many in the FPG family.”
FPG was born in 2010 when the company acquired 22 fu- neral homes and five cemeteries from Service Corporation In- ternational. The FTC mandated SCI to sell off some properties in the wake of its acquisitions. The company now owns and op- erates 34 funeral homes and six cemeteries in 13 states.
The company launched with Shaffer as president and chief executive officer and Price as executive vice president and chief financial officer. Shaffer was previously chief financial officer and cofounder of Keystone Group Holdings in 1996. Price, also a co-founder of Keystone and was its chief operating officer, was originally FPG’s executive vice president and chief operating officer. Rounding out the original executive partnership team were Christopher Thomley, chief finan- cial officer; and Paul Haarer, vice president of business development. Thomley has left funeral service and is CFO with PawsPlus, while Haarer recently joined succession planners, NewBridge Group, as managing director.
The restructuring of FPG leadership a year ago resulted in the appointment of Rex as president and CEO. Shaffer and Price were given the titles of executive vice presidents. It was reported then that in conjunction with its board of directors and Sterling Partners, the company decided to seek executive leadership from outside the funeral home and cemetery in- dustry, specifically targeting the hospitality industry.
Prior to joining FPG, Rex was CEO of the Brad Rex Group, a hospitality consulting company with expertise in busi- ness turnaround and growth, guest service enhancement and other hospitality issues. Previously, he served as executive vice president and chief customer officer for Hilton Grand Vacations and also spent 12 years at Walt Disney Company, where he led the EPCOT theme park at Walt Disney World for more than five years. Not long after Rex was named presi- dent and CEO, the company moved its headquarters from Tampa to Orlando.
In Monday’s company email, Rex emphasized, “We will continue to move forward with our current vision and strategic approach to create experiences that redefine the funeral experience through innovation and a holistic customer experi- ence.”
With the departure of Price and Shaffer, the company’s executive management team is decidedly thin of funeral service veterans. However, FPG recently announced that it named funeral director Justin Baxley as its senior vice president and chief customer officer. Prior to joining Foundation Partners Group, he was president of Hiers-Baxley Funeral Services and Highland Memorial Park, which was acquired by FPG last year. The firm consists of five funeral homes in Ocala, Bel- leview, TimberRidge, The Villages and Chiefland, and a cemetery, Highland Memorial Park, in Ocala. Hiers-Baxley has served north-central Florida since 1885.
Robert G. “Bob” Horn, who co-founded Keystone Group Holdings with Price and Shaffer, and who joined the FPG board of directors shortly thereafter, resigned from the board late last year. At the time, Horn cited a “long list of differ- ences with Sterling Partners” as the reason for his resignation.
When asked to comment on Shaffer’s and Price’s resignation, Horn was again candid. “Co-founders Jim Price and Steve Shaffer were the heart and soul of Foundation Partners,” Horn said. “While disappointing, their departure was in- evitable as financial backer Sterling Partners decided long ago that they know more about funeral service industry prac- tices and relationships than veteran industry practitioners.”
Last week’s resignations did have industry observers wondering about the changes taking place at the company. David Nixon, Nixon Consulting and Heartland Funeral Solutions, commented that something seems to be amiss with FPG with the departure of the core principles.
“There will be a real challenge for the remaining Foundation Partners employees to succeed since the mass exodus gives all indications that the founders did not approve of the new rules,” Nixon said. “Else, why would they have left so suddenly?”
Nixon also questioned if present leadership has enough industry connections now to move forward.
“I wonder if the exiting personnel have options to remove their equity anytime soon?” Nixon said. “Speculation would be that they will take their options as soon as possible.”
Tom Johnson, founder of Johnson Consulting Group, called the departures of Price and Shaffer “a shame.”
“The founding partners of [FPG] are all quality executives with vast experience in our industry,” Johnson said. “There is no doubt in my mind that they performed to the utmost of their abilities throughout their years at the company.
“That being the case the only issue would be that Sterling’s expectations were not being met and they decided to move ahead without the industry executives,” Johnson added. “Personally I think it is a mistake to do so but then again Sterling has been around for some time and must know something about the industry that I do not understand. I think Jim and Steve will do just fine in their future endeavors. It remains to be seen how Sterling will progress with Foundation in the months to come.”
When asked for further comment, Rex reiterated the content of the company email, calling particular attention to his comment: “We will continue to move forward with our current vision and strategic approach to create experiences that redefine the funeral experience through innovation and a holistic customer experience. In the interim, I will lead all ac- quisitions efforts.”
Taking in a larger perspective, Dan Isard, The Foresight Companies, said there is a basic understanding that funeral home owners should have when they sell their business. “That is, they have sold their business,” he said. “I have witnessed this process more than 500 times over 30 years and the process is to a large degree ‘relationship oriented.’
“People tend to sell their business to the company representatives they like or respect the most,” Isard added. “The problem is simple. The problem is that these people may leave the employ of the company. They may do so by natural causes (death or retirement) or by their choice, or by the decision of the board of the company. We have seen this out- side of funeral service and within funeral service. The resignation of Jim and Steve from Foundation Partners is one such event.
If there is a lesson to be learned, Isard said, “If you elect to sell your business, don’t sacrifice price due to relationship. Don’t deal with one company based upon relationship if the absence of that relationship would cause you to make a dif- ferent decision.”
In describing an evolving funeral service marketplace, not only with consumers but providers and suppliers as well, Nixon said he is seeing an influx of outside influences into funeral service with such new money players as Sterling (Foun- dation Partners), Kohlberg (Aurora) and, he believes, more to come.
“They want to jump on the deathcare bandwagon as Boomers start [to die off],” he said. “These new players do not or will not necessarily understand funeral service. Some will succeed in their efforts to blend funeral service with business models. Many will not make it if they don’t take the time to learn the people and passion of funeral service.”
In his opinion, Nixon said that either the new arrivals will advance funeral service into the next generations or help erode a once stable profession. He wondered, “Without the passion to push forward in the middle of the night, will these new players make the right connections to build a sustainable business?”
As to funeral homes themselves, Nixon is even more convinced that those funeral businesses that are financially strong right now will grow. “Those firms without a firm financial position today may not survive the next 10 years,” he said.