I think what you are proposing can be a big advantage rather than a disadvantage. If you can acquire a company with good management that doesn't require a lot of steering/care&feeding/whatever - that is ideal, because then you can use C-level brainpower on strategic plans. You have to ensure though that after closing you build the relationships and can learn the business well enough to have effective governance. My simple test is this question: "Do I have confidence that bad news will be communicated to me as it arises?" and a related one, is "without relying on management, do I have independent information sources that will alert me to issues (w/ customer service, whatever aspect, etc.)?" Both are about trust, relationships, and self-reliance. Software also helps a lot. Getting a business unit to run like a machine though should always be the goal. Good luck with the project!

I considered this approach for smaller deals (CF of $200K to $600K) but concluded it was not realistic (for many of the reasons Matthew stated). It will be incredibly challenging to know the business, employees, and customers enough to be an effective leader if you aren't there day-in-day-out. I've heard others use an analogy that it is a bit like putting your car in cruise control on the highway and then hopping in the backseat for a nap. Sure, the car may keep driving forward, but it will not end well.

That said, I do think it is a viable strategy to buy a relatively simple business, run it full time for a while (e.g., 1 to 3 years) and then gradually hand off your leadership responsibilities and step away. I just don't think you can skip over that period of fully immersing yourself in the business.

Yes - I did this. Happy to discuss.

My first reaction is that you're not going to really know the business by never immersing yourself in it. If you are self funded, what EBITDA range are you looking at? If these are companies at 1MM or below, I feel that this is even harder to do.

As in investor I'm under the impression that the searcher is there to use his skills/brilliance to grow the business. I don't see someone growing a business, expanding product lines, increasing efficiency, etc just checking in once a month. Your management team may be able to do a good job running the business day to day, but it's going to be your entrepreneurial ingenuity that is going to take the business to the next level. And most of the gains to be had from search funds appear to come from growing the business, not just maintaining it.

This can definitely work and many do it. Branson was a big fan - calls it working 'on' the business rather than 'in' it. He thinks you lose perspective working in the business full time.
As owner it's safest to know the business well but not essential. Many entrepreneurs own multiple business and delegate management almost entirely. All you need is good teams, great people - the rest is automatic.

That would put you closer to being an independent/fundless sponsor than a search entrepreneur. It's a great idea if you can manage it, but just be aware that a big reason investors invest into search funds because they're looking for entrepreneurs to actively run the companies to generate the success/returns. Additionally, keep in mind that the standard model is for a portion of the equity/carry to vest over active management time, so you may not be able to ask for that if you move to an independent sponsor model.

Ideally, you will want to invest into companies that have strong middle management teams who run the day to day so you can focus on inorganic growth.