Industry featured in `Six Feet Under’ is on the rise

“Death care” has become a hot topic, thanks to”Six Feet Under,” the hit HBO series about a family funeral business. The high-margin industry also may be fertile turf for investors.

GTCR Golder Rauner LLC, a Chicago private-equity firm with $4.5 billion under management, has been investing in the $5 billion funeral home industry since 1986, says managing principal Bruce Rauner.

“The funeral home industry has huge margins – something like 35% to 40% before taxes,” Mr. Rauner says. “It’s also a recession-proof business, with strong long-term fundamentals even though people are living longer.” His firm owns Keystone Group Holdings Inc. of Tampa, Fla., launched four years ago to acquire funeral homes and cemeteries.

Death care is typical of the niche businesses that have been GTCR’s specialty. “We look for fragmented industries where we can form a new partnership with an outstanding CEO or management team, start a new corporation and build what would become the most dominant player in the field, through internal growth and a series of strategic acquisitions,” Mr. Rauner says.

Other niche businesses in the firm’s portfolios include paging, coin-operated laundry machines, motor coaches, hospital management and debit card processing.