For years, the death care business looked good on paper for Hillenbrand, Inc.: the company had EBITDA margins of more than 26% in an industry that historically presented itself as stable, profitable, and highly predictable. With strong financial performance and a solid position as market leader, how does one know when being better isn't enough? Although Hillenbrand remained highly profitable, a decline in the annual burial rate and increased demand for cremation reduced death care profits and revenues. The president and CEO, Ken Camp, was convinced it was time to move Hillenbrand in a new direction and saw three main pathways—acquisitions, divestitures, or financial restructuring (i.e., use cash flow to reduce debt, raise dividends, or buy back stock). Which might represent the best opportunity? The case material includes profiles of several serious diversification contenders for students to analyze.
