This article was published on July 11, 2025, at 4:19 p.m. on the ChosunBiz MoneyMove site.
In April, Korea's top funeral company, Friedlife, was acquired by Woongjin Group. The corporate value is 900 billion won. The domestic private equity fund management company, VIG Partners, has made more than four times its investment principal through this sale.
Friedlife has set many records in its nine years with VIG Partners. Since the birth of the funeral service industry in Korea in the 1980s, this marked the first M&A and institutional investment case. Moreover, the merger of six companies to rise as the number one business is a rare occurrence not only in the funeral industry but also in other sectors.
◇An industry that crossed over from Japan, transformed in Korea
The domestic funeral service industry is originally modeled after Japan. In Japan, the 'Kei' system, which prepared funerals at the community level and helped one another, gradually evolved into the form of funeral companies, and currently, there are around 2,000 funeral service providers nationwide. Most of them are small to medium-sized businesses rooted in their regions.
This model was introduced to Korea in the 1980s, starting from Busan, which is close to Japan, where regional funeral companies began to emerge one by one, later spreading nationwide. Naturally, the form of Korea's funeral services could not help but be similar to Japan's.
From 2013 to 2014, the number of national funeral service companies was close to 300 due to their proliferation. However, unlike Japan, where local beliefs are well-developed, Korea's funeral culture varies little by region, and the processes are standardized nationwide. Thus, there was no structural reason for the existence of so many region-based funeral companies in the market.
Shin Chang-hoon, CEO of VIG Partners, noted, "Even until then, small funeral companies often took customers' money in advance but failed to fulfill their obligations or went bankrupt, resulting in numerous cases of consumer damage and a lack of trust in the entire funeral industry."
VIG Partners interpreted this structural problem as an 'opportunity.' They judged that the Japanese-style multi-core structure did not fit our culture and concluded that a large single axis was needed in the domestic funeral market. To provide nationwide funeral services, corporate sustainability and financial transparency had to be secured above all. Eliminating consumers' concerns about whether 'this company will exist in 10 years' was the first step toward normalizing the industry.
◇Met directly with 40 national funeral companies... Acquired 6 companies to become the top firm
VIG Partners began to take a serious interest in the funeral industry around 2014-2015. At that time, the company had acquired Dongyang Life Insurance and was managing it, having sufficient experience in the sales methods and risk hedging of insurance companies.
VIG Partners focused on the structural similarities between the funeral industry and the insurance industry. In particular, the two industries share a basic revenue structure with the 'prepaid revenue model.' Insurance operates on a system where customers pay a certain amount in premiums each month, and when certain conditions are met, the company pays out insurance money. Similarly, funeral services provide services at the time of death with the amount prepaid by the customer during their lifetime. Both systems ensure current revenue based on uncertain future events.
However, there is an important difference. Insurance is designed on the premise of loss. For example, a customer pays a premium of 100,000 won and is covered for 30 million won, which means the company must manage risk by estimating how many enrollees will file insurance claims. If the actual claim rate is higher than expected, the company incurs losses.
On the other hand, in funerals, if a customer pays 4 million won, they receive funeral services worth 4 million won in return, concluding with a fixed-rate model. This significantly reduces the likelihood of a 'mismatch' of profit and loss occurring as seen in insurance. Due to the relatively fixed number of clients, payment amounts, and unit prices of services, the financial structure is simpler and risk management is more straightforward.
Before acquiring its first funeral company in 2016, VIG Partners meticulously analyzed all funeral service providers nationwide. By excluding those with unclear financial conditions, incident histories, or unstable corporate structures, only about 40 companies remained from over 250. CEO Shin traveled the country to meet these 40 funeral service companies directly.
After thorough preliminary research, 'Good Life' was selected as the first acquisition target. Ranked among the top 10 in the industry, Good Life had a good reputation and a relatively sound financial condition. Subsequently, VIG Partners engaged in a series of M&As and bolt-ons, acquiring four funeral companies and two funeral homes over three years, and integrating all of them under the single brand Friedlife.
When VIG Partners initially acquired 70% of Good Life's equity, the company's asset value was only 150 billion won. Starting with Good Life and merging six companies, the current Friedlife has an asset value of 2.7 trillion won. The market share in Korea's funeral service industry stands at around 25-26% (based on advance payments), nearly double that of the second-largest company (11-12%).
VIG Partners went beyond simply acquiring companies and also worked to assess their financial structures and resolve asset mismatches. They developed a simple benchmark model to quickly calculate company values using just a few financial indicators.
◇Customers who passed away during cruise trips and funerals for Cheonan sailors... Large funeral companies with systems in place
VIG Partners has focused on changing the systems of funeral companies. The biggest challenge has been to 'restore trust.'
First, they established consumer protection mechanisms through bank guarantees. Even if a funeral company goes bankrupt, customers should be able to recover their advance payments through the bank, which has been the principle. Currently, Friedlife has signed payment guarantee contracts with all major banks in the country. This is regarded as one of the leading examples in the industry.
They also built nationwide funeral infrastructure to secure physical coverage. By operating funeral homes, organizing protocol teams, and securing ambulance partners, they systematized the process to ensure customers receive consistent quality funeral services anytime, anywhere.
"A few years ago, a customer of Friedlife passed away on a cruise in Southeast Asia. The ship made an emergency stop, and we had to retrieve the deceased, but each country has different laws regarding the transport of bodies, making it difficult for the Ministry of Foreign Affairs to handle easily. Ultimately, Friedlife went to the respective country to manage the procedure according to the laws."
The funeral industry inevitably faces many incidents. For this reason, financial investors tend to shy away from this sector. We boldly entered this area, changed the industry structure, and systematized the funeral process. We believe that the presence of trustworthy funeral companies holds significant importance for the public."
Based on this, Friedlife has entered the realm of public protocol coordinated by the government or local governments. Friedlife has taken charge almost exclusively whenever there are national memorials, such as the funerals for the Cheonan sailors.
The funeral industry is evolving beyond a simple private service sector, becoming a social infrastructure that manages life after death. A system provider capable of steadily executing the complex procedures related to funerals has emerged. The structure created by VIG Partners through Friedlife has been evaluated as a model for what 'sustainable funeral services' should look like.