Lately, I've been thinking about how to scale the search fund model. That is, putting a management team in place -like regular PE funds do- to run the company for you so that you can go out and pursue other acquisitions. But unlike PE funds, the goal would be targeting companies with the size most Search Fund focus on, and having a more search-fund like approach.

The main reason why PE funds don't get into this company size is because operational costs make it unprofitable (unless it's an add-on or strategic buy). So I guess that, if one is able to solve the problem of being functional while keeping a very lean structure, it could be possible.

Also, another concern would be management compensation. If the company is very small, management compensation could significantly lower the profitability of the company. That is why in a search fund, the GP and the management role is merged into one single person.

What are your thoughts on the matter? Do you know someone already doing this?
This may also be a good strategy for brokers to transition to becoming buyside/GP's and sponsor their own deals, leveraging on the deal flow they already have access to.