Thank you, Erin - that was a very helpful response. I think I’m in an unique position as one of my potential board members (even during the search phase, which is expected to be funded) is an officer of a large public company and his general counsel is requiring it for him to become a formal advisor. My research has suggested that from a coverage standpoint $5mm is the general acceptable policy limit for businesses in a broad size range (based on TEV). Is there a relationship to keep in mind between size of the overall company to size of policy coverage (i.e., the larger the business, the higher the policy coverage one should purchase)? I’ve seen billion dollar businesses that have $5mm of D&O coverage, so would a $20mm TEV business require the same amount of coverage?

Without getting too technical, Search Funds actually resemble a private equity fund during the search phase. The searcher is reviewing investments opportunities, submitting LOI’s and delivering investment prospectus to their LP’s. Private Equity firms or firms that invest money on behalf of investors or limited partners have a General Partnership liability exposure, or GPL coverage. GPL is a packaged insurance policy that covers Private Equity Professional Liability, Management Liability (D&O, EPL) and Outside Directorship Liability. The Private Equity Professional Liability coverage provides very board Errors & Omissions coverage resulting from poor due diligence, misleading offering memoranda, advisory fees or management services provided to fund, acquisition entity or consulting fees to a portfolio company. During the search phase, the Private Equity Professional Liability coverage part is most likely where any claims would fall, and the cost of GPL coverage does not make financial sense to search funds. For instance some of the Institutional search investors carry GPL coverage and they require their portfolio companies/search investments to carry D&O coverage. There are ways in which these overages overlap but generally speaking one does not protect the other. Happy to chat live.