How Private Equity Is Buying Up Pet Cremation Services

Lucas: So, if you've listened to any of the last few episodes, you know the pattern: private equity finds a fragmented, boring, cash-flowing industry, and starts rolling it up. Luna: Right - parking lots, funeral homes, dental labs. What's this week? Lucas: This week: pet cremation.

Or more broadly, pet aftercare. The business of handling your dog or cat's remains after they pass away. Luna: Wait - that's actually an industry? I mean, obviously people cremate pets, but I didn't think there were chains.

Lucas: There are now. And they're growing. The US has roughly 4,000 independent pet crematoriums and memorial services - mostly mom and pop shops. And PE firms are buying them up, exactly the way they bought up human funeral homes fifteen years ago.

Luna: Okay, so what's the play? The economics can't be that different from human funeral services, right? Lucas: Similar, but with a few twists. A basic pet cremation runs between $150 and $400, depending on the animal's size and whether you want the ashes returned.

The gross margins are north of 70 percent - almost pure service revenue with low variable costs. Luna: And it's recession-proof, I'd imagine. People don't stop having pets, and they don't stop caring about them when money gets tight. Lucas: Exactly.

That's the core thesis. Pet ownership has been rising for decades - about 70 percent of US households now have a pet, up from 56 percent in 1988. And people are spending more on them year after year. The American Pet Products Association says spending on pet services, which includes vet care, boarding, and cremation, hit $38 billion in 2025.

Luna: So the demand is there. But what makes pet cremation specifically attractive to a PE firm, as opposed to, say, pet food or pet insurance? Lucas: Two things. First, it's a regulatory arbitrage play.

Human funeral homes are heavily regulated - state licensing, emissions standards, handling of human remains. Pet cremation is mostly unregulated at the state level. There are no federal rules. So you can consolidate without dealing with the compliance overhead that makes human funeral roll-ups tricky.

Luna: And the second thing? Lucas: The emotional pricing power. When a pet dies, the owner is grieving and wants a dignified farewell. They're not price-shopping.

So you can raise prices gradually without losing volume. The same way funeral homes charge $2,000 for a coffin that costs $300, pet crematoriums can charge $300 for a cremation that costs maybe $50 in gas and labor. Luna: That sounds cynical, but it's true. We did an episode on human funeral homes a while back, and the economics were very similar.

Lucas: Right. So the roll-up playbook runs like this: you buy a regional operator at maybe 4 to 6 times EBITDA, because it's a small business with no succession plan and the owner wants to retire. Then you centralize the cremation equipment, the call center, the marketing, and the website. You cross-sell memorial products - urns, paw print keepsakes, jewelry that holds a bit of ash.

Luna: And that adds revenue per customer without adding much cost. Lucas: Exactly. The largest player right now is a company called Gateway Pet Memorial Services. It's backed by KKR - one of the biggest PE firms globally.

They've been acquiring independent crematoriums across the Midwest and Southeast since 2021. They now operate over 60 locations, and they're still buying. Luna: KKR doing pet cremation - that's a headline. What multiple did they pay for these deals?

Lucas: From what I've seen in industry trade journals, they're paying between 5 and 7 times EBITDA for individual operators. After they roll them up and centralize back-office costs, the combined entity can trade at 10 to 12 times EBITDA when they eventually exit - either to a larger PE firm or through an IPO. That's a double your money return in about five years. Luna: So the math works.

Are there any other big players? Lucas: Yes - there's a company called Pet Cremation Services, owned by a mid-market PE firm called FFL Partners. And another platform called Heavenly Paws, backed by L Catterton. But Gateway is the one to watch because of KKR's scale and their willingness to pay for quality assets.

Luna: What about the competitive dynamics? If you're a mom and pop pet crematorium, are you worried? Lucas: You should be. The big platforms are investing in expensive cremation equipment that reduces emissions and speeds up turnaround.

They have 24/7 call centers, online booking, and partnerships with veterinary clinics. The independent operator with a single furnace and a phone number can't match that. So they either sell or slowly lose market share as vets start referring clients to the national platform. Luna: That's the standard PE playbook - invest in efficiency, then use scale to squeeze the independents.

But is there a risk that the industry gets over-consolidated and prices become a political issue? Lucas: It's possible, but less likely than with human burial. Pet aftercare doesn't get the same regulatory or public scrutiny. People are emotionally attached, but they don't organize.

And the average transaction is small - a few hundred dollars - so it doesn't trigger the kind of outrage that a $10,000 human funeral might. Luna: Still, I wonder about the ethical dimension. If a family is grieving and the only crematorium in town is owned by a pe backed chain, what choice do they have? Lucas: That's the same question we asked about human funeral homes and hospice care.

The market tends to accept higher prices as long as the service quality is good. And the PE firms argue that they improve quality - better equipment, more reliable service, more options for memorialization. Whether that's true in practice depends on execution. Luna: Speaking of quality - there's been some controversy about pet cremation practices, right?

Like, do you really get your own pet's ashes back? Lucas: That's a big issue. Because cremation is a batch process in many facilities - multiple animals at once - unless you pay for a private cremation. Some operators have been caught mixing ashes or returning the wrong remains.

pe backed platforms are trying to differentiate by offering gps tracked cremation and certification that your pet was cremated individually. That's a premium service, of course. Luna: So transparency becomes a selling point - and a way to charge more. Lucas: Exactly.

Gateway, for example, advertises a 'witnessed cremation' option where you can watch your pet enter the chamber. They charge an extra $100 for that. It builds trust and creates a higher-margin revenue stream. Luna: Okay, so where does this go over the next five years?

Is every pet crematorium going to be owned by a PE firm? Lucas: Not every, but most of the attractive ones. The market is still very fragmented - maybe 80 percent of the $2 billion pet aftercare industry is independent. PE firms have a long runway of acquisitions ahead.

I'd expect to see another big platform emerge in the next two years, probably from a firm that hasn't entered the space yet. Luna: That makes sense. And if the human funeral home roll-up is any guide, we'll see price increases of maybe 20 to 30 percent over the next decade, just from consolidation effects. Lucas: Right.

And listen - if this kind of conversation is useful to you, if it helps you think about where money flows and how industries change, that's exactly why we do this show ad-free. The way to keep that going is listener support - buy me a coffee dot com slash fexingo. It's a tiny thing, but it makes a big difference. Luna: Yeah, absolutely.

We don't run ads, so it's really the listeners who keep this going. If you find yourself citing one of these episodes in a discussion, maybe toss a coffee our way. Lucas: Anyway - back to pet cremation. One more interesting angle: the demographic tailwind.

Millennials are the largest pet-owning generation, and they treat their pets like children. They're more likely to spend on memorialization - urns, jewelry, even pet cemeteries. That cohort is aging into prime pet-ownership years, and they're bringing higher willingness to pay. Luna: So the industry has both a consolidation story and a demand story.

That's a powerful combination for private equity. Lucas: It is. And it's one of those quiet, behind the scenes sectors that most people never think about - until they need it. And by then, the industry has already changed.

Luna: Well, I hope our listeners never need it soon - but if they do, they'll know who owns the furnace. Lucas: Exactly. Next week, we're looking at something completely different: how private equity is buying up mobile home parks. That one's got a whole different set of dynamics.