Actually, if a search has to be conducted, then you can't name a coach in waiting. This would violate the regulations that require a search. As I said in my first post, this is all murky. In the past, there have been hires at the university level that were targeted from outside the institution (i.e. no search). But then you look at high administrative positions and there has to be a search even if there is an internal candidate. Presumably, those regulations are there for a reason, to comply with federal law. But I am totally unaware if anyone has ever filed a grievance, complained or sued on that basis. It seems to me that anyone who contests these regulations commits a form of career suicide. Therefore, the regulations are without teeth.
That doesn't mean though that you can be totally brazen and name someone a coach-in-waiting and then pretend to conduct a search. That would be totally frowned upon.