The best insurance broker for a search fund is the one that fits your calendar and your board. It can price and bind a program in the short window between letter of intent and closing, answer your board's questions about directors and officers (D&O) insurance, and add companies later without starting over. That is a fit test, not a name. This guide gives a criteria checklist and the questions to ask, for searchers, search fund CEOs and board members, whether the search is traditional (investor-backed) or self-funded.
The short answer
- Test nine things: acquisition experience, diligence support, closing-day binders (written proof that coverage is in force), D&O knowledge, board reporting, readiness to add companies, licensing, pay and independence, and a named day-to-day team.
- Ask every candidate, including the seller's broker, the same written questions and compare answers, not pitches.
- Bring a broker in at the letter of intent. Insurance and loss history are diligence items, and your go-forward insurance cost can differ from the seller's historical cost.
- Check each firm's license in your state, and ask in writing how it is paid.
- Morrow is one option. A buyer needing life, benefits or a very large complex program, or operating outside Morrow's licensed states, should look elsewhere.
What makes a search fund different from other buyers?
A search fund company has a shape that most owner-run businesses do not. In the traditional model, investors fund the search, then fund the acquisition, and typically hold a majority of the board seats afterward while the searcher becomes CEO (Stanford and a law-firm description of the model are cited below). That layer changes what a broker has to do.
- Speed. The window from letter of intent (LOI) to closing is short, and every insurance deliverable has a deadline.
- A board. Investor directors may ask whether the company carries D&O insurance and what it protects. See directors and officers insurance for search fund boards. Check your investor documents before assuming it is required.
- Reporting. You will likely update the board on policies, claims and renewals. See how to report on insurance to your investors and board.
- Lenders. If bank or Small Business Administration (SBA) debt funds the deal, the loan agreement adds insurance terms.
- More deals. Some searchers plan add-ons, so today's program should be able to absorb a second company.
- A thin team. The CEO may be the only executive, with no risk manager, so the broker's explanations matter more.
The lifecycle view, from search to exit, is owned by insurance for search funds: the complete guide. This guide covers one decision inside it: who to hire.
How do I compare brokers when closing is weeks away?
Use the table as a checklist, and ask every candidate the same question in writing. Score each answer 0 (no answer), 1 (general answer) or 2 (specific, with steps, owners and documents). Treat closing-day binders, diligence support and licensing as must-haves. Weight D&O and board reporting more if investors will sit on your board, and lender evidence more if bank or SBA debt funds the deal.
| Criterion | Why it matters | Question to ask | What a specific answer sounds like |
|---|---|---|---|
| Acquisition experience | Closing-day work differs from a normal renewal | Walk me through how you handled a recent stock deal and a recent asset deal, without client names | A dated sequence: documents in, review, quotes, binders, evidence |
| Diligence support | The seller's costs may not be yours, and a quality of earnings (QoE) report may restate insurance cost on a go-forward basis if its scope includes it | With the seller's consent and under any confidentiality terms in the LOI, can you review loss runs and declarations pages and tell me what the program might cost me? | A written list of gaps and cost drivers, with the caveat that terms depend on underwriting |
| Closing-day binders | Coverage must be bound, not just quoted, when you take over | What will be bound at closing, who confirms it and in what form? | A checklist naming the named insured, effective time, lender clauses and written confirmation |
| D&O and management liability | A sale can trigger a change in control provision in a seller's claims-made policy. Management liability is a package that can combine D&O, employment practices and similar coverage | If the seller has a D&O or management liability policy, how do you handle it at closing? How would you set up D&O for the new company's board? | Explains what happens to the seller's policy at a sale (a change in control clause), whether it converts to run-off (covering only pre-sale acts until the policy period ends), whether a tail (extra time to report claims, which can be bought or negotiated) is available and who is protected. Also covers the seller's other claims-made policies, whose terms differ policy by policy and are not standard |
| Board and investor reporting | You will report on policies, claims and renewals | What does your board-ready insurance summary look like? | A sample with policies, limits, premiums, claims and renewal dates |
| Multi-company readiness | Add-ons arrive on their own dates | How do you add a second company to the program? | A repeatable playbook, with named insured, renewal alignment and workers' compensation notices |
| Licensing and role | Producers are licensed by states | Which of my states are you licensed in, and what is your National Producer Number (NPN)? | A direct answer you can check on your state's lookup |
| Pay and independence | It shapes incentives | How are you paid, and does that vary by insurer or volume? | A plain answer. Disclosure rules vary by state, and New York, for one, requires producers to give buyers certain disclosures about their role and pay, with exceptions. See how insurance brokers get paid |
| Day-to-day team | You need an owner for requests | Who handles my certificates and claims calls? | A named person and a backup |
On license checks, a license shows what a producer may sell, not whom the producer represents. Start with your state department of insurance lookup, because each state licenses its own producers, and ask for the NPN so you identify the right person. Lookups differ in what they show.
When should I bring the broker in?
| Stage | What the broker should be doing |
|---|---|
| Search | Nothing to buy yet. Ask a broker which exposures your target industries tend to carry, so your first diligence questions are better |
| LOI and diligence | Review the seller's declarations pages and loss runs, flag underinsurance, and give indications so the model carries a realistic insurance cost. Ask deal counsel what the confidentiality terms allow before you share the seller's documents. See was the seller underinsured |
| Signing to closing | Prepare the program, lender evidence and the D&O approach. Confirm what happens to the seller's policies under the deal structure |
| Closing day | Bind and confirm, in writing, every policy that must be in force |
| First 90 days | Run the full review, fix urgent gaps and report ownership changes to the workers' compensation insurer on time. See your first 90 days of insurance |
| Each board cycle | Deliver a short summary, flag renewal decisions and update the add-on plan |
A quote at any stage is not coverage. Only a bound policy with written confirmation is in force.
Does a self-funded search need a different broker?
The same criteria apply, but the weights shift. A self-funded searcher pays for the search personally and arranges equity and debt after finding a company, so the loan agreement and the outside investors, not a standing board, may drive the insurance requests. If an SBA 7(a) loan is involved, closing-day proof to the lender matters more, and choosing a broker for SBA-funded buyers covers that. The primer on self-funded versus traditional search explains the funding differences.
What might a written comparison look like?
A hypothetical example. A searcher signs a letter of intent for a 40-employee company in two states, with closing targeted in about eight weeks. The searcher sends the same nine written questions from the table to the seller's broker and to two other firms, with the seller's declarations pages and loss runs (shared with the seller's consent), and asks for answers within two weeks. One firm replies with a closing-day checklist, a point-by-point plan for D&O (including the seller's policy, if there is one) and a sample board summary. A second sends a general overview. The seller's broker answers well on the existing program but has not placed D&O for a board with investors. The searcher shares the written answers with the investors, picks the firm whose answers were specific, and keeps the seller's broker's contact for claim history. A simpler deal with no board might have kept the seller's broker. The point is the written comparison, not the outcome.
For a fuller process, see how to run a broker selection process and questions to ask an insurance broker.
Is Morrow a fit for a search fund?
Morrow is an independent insurance agency in Boston that focuses on business insurance, and the brand of Afthonea Inc. For a search fund it can review the declarations pages and loss runs of a target or an acquired company, flag gaps and request quotes from insurers. It does not issue policies or decide coverage, and any new terms depend on carrier underwriting. A quote or a review request is not bound coverage. Morrow is licensed in these states only: Arizona, California, Colorado, Florida, Georgia, Illinois, Louisiana, Massachusetts, Michigan, Nevada, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas and Virginia.
Another firm may fit better if you need life or disability insurance, benefits, or a very large and complex program, or if your operations are outside those states. Key person life insurance and tax questions belong with a life insurance specialist and your accountant. Ask deal counsel and your board about governance questions.
Keep reading
- Insurance for Search Funds: The Complete Guide
- D&O Insurance for Search Fund Boards and Investors
- How to Report on Insurance to Your Investors and Board
- Best Insurance Broker for a Roll-Up or Holding Company: How to Choose
- How to Run an Insurance Broker Selection Process After an Acquisition
- All guides for new business owners
Frequently asked questions
When should a search fund CEO hire an insurance broker?
Ideally at the letter of intent. A broker can review the seller's declarations pages and loss runs before closing so your model carries a realistic cost. At minimum, engage one well before closing day.
Does my search fund company need directors and officers (D&O) insurance?
It can be worth considering, because investors who join the board may ask about it, but whether you need it depends on your investor documents, your governing documents and your advisers. Ask your board, your counsel and your broker.
Should I keep the seller's broker after a search fund acquisition?
It can work, especially after a stock purchase. Test fit first: ask the same written questions you ask any candidate, and check whether the broker has placed coverage for a company with investors and a board.
What should I ask a broker about the seller's D&O policy, if there is one?
Ask what the policy says about a sale, whether it has a change in control provision, whether it stops covering new acts but keeps covering earlier ones (run-off), and whether a tail is available. If the policy has one, read the wording, because terms vary. Ask the same about the seller's other claims-made policies, such as employment practices, professional liability and cyber, whose terms differ policy by policy. If the seller has none, ask how a new program would be set up.
Do I need a broker licensed in every state where I operate?
Not always in every state, but the answer depends on the state and the line. Producers are licensed by states, and rules for placing risks located in other states differ. Ask the firm in writing which of your states and lines it can place, check each license on the state department of insurance lookup, and ask for its National Producer Number (NPN).
References
- Stanford Graduate School of Business: Search Funds Keep Offering a Proven Path to Ownership (July 13, 2026)
- Fredrikson and Byron: Search Funds, The Life Cycle (November 17, 2025)
- New York Department of Financial Services: 11 NYCRR 30.3, Compensation disclosure (Cornell LII)
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This article is general information, not legal, tax or financial advice, and not a coverage determination. Coverage depends on the actual policy wording, carrier underwriting, your purchase agreement and your contracts. Ask your attorney and accountant about deal and legal questions.