When Chris Koch was in the running for CEO at Carlisle Companies in 2014, he had been with the company for six years and was competing with two much longer-tenured internal candidates for the position. During the interview process, the board asked him a standard question—“Why should we choose you?”—and his answer was straightforward. “We’re all qualified,” he said, “but if you want to do the same thing you’ve been doing for the last 20 years, then pick one of the other guys. If you want something different, then go with me because I have a different vision for the company and one that will unlock more value.”

Ten years later, the Carlisle of today is unrecognizable from the one he inherited. Koch oversaw a bold agenda to convert the highly diversified manufacturer (with products ranging from cable for the aerospace and defense industry to food service equipment) to a company sharply focused on becoming a powerhouse in building products through differentiated products and solutions, operational excellence, and mergers and acquisitions.

In fact, few companies can match Carlisle’s record in strategic M&A. For example, over a six-year period, it divested a series of businesses in food service products, brakes and friction materials, fluid technologies, and interconnect technologies. In parallel, it embarked on a series of scope deals to expand its building products footprint, with such headline-making acquisitions as the $1.6 billion purchase of Henry Company in 2021. In 2024 alone, Carlisle bought MTL to expand its architectural metals business and Plasti-Fab (in a scale deal) to extend its expanded polystyrene insulation business. Overall, the company has made 28 acquisitions totaling $4.2 billion since Koch took the helm, as well as five divestitures for $3.7 billion.

The emphasis on divesting noncore operations and investing in areas aligned with long-term strategic growth has clearly paid off for Carlisle, which has seen revenues grow by 1.4 times to $5 billion in the past decade and adjusted EBITDA margins that have increased 6 percentage points over that period. The stock price has risen nearly fivefold. Along the way, Koch has learned crucial lessons that could be invaluable for CEOs pursuing M&A for long-term growth. In an interview with Bain Partner Preston Henske, he recently shared some of those lessons and the mindset that continues to move Carlisle forward.

Q: Since its earliest days over a century ago, Carlisle has consistently made M&A a key part of its business strategy. When you became CEO in 2016, what were some of the newest challenges companies faced in pursuing M&A that didn’t exist even a decade earlier?

Koch: By 2016, competition for deals had significantly increased from what Carlisle had experienced in prior years. Private equity interest in building products was emerging, so we had a lot more competition for deals. There was a lot of capital out there pursuing opportunities, and interest rates were low. We always had tried to stay outside of auctions. One program we had success with was our “ambassador” program. We had people called Carlisle ambassadors who would go out to family businesses within our fields of interest and try to buy them outside of a process. Somewhere around 2015, we found sellers were running formal processes more often, making it harder to find proprietary opportunities. Even when we found proprietary opportunities, sellers were now adding a step, saying to us, “Hey, we like you guys, and we are pretty sure we’re going to go with Carlisle, but we want to run a mini process just to validate the value.” In addition to that, the bar for operational excellence and value creation through integration had risen sharply by 2016.

Q: What’s the single biggest lesson you’ve learned about M&A that you’d like to pass on to other CEOs?

Koch: Target companies need to have their own organic growth path. In other words, we weren’t going to do an acquisition just because it was considered “strategic.” It had to meet our four stated criteria, the first of which was an organic growth path. I would also say don’t acquire into a new leg where you lack expertise. This relates to what your colleague Chris Zook says in Profit from the Core. If you can’t explain your entitlement to win, it’s probably a bad deal. And we’ve learned not to depend on revenue synergies like cross-selling to justify a transaction—they’re tempting but rarely materialize. That’s why we avoid putting revenue synergies in our model. If you need them to make the deal work, you probably shouldn’t do the deal. Focus only on hard, measurable synergies that you can control. Another lesson is to only buy companies that already have really good management teams. Those teams know their customers and markets and are best suited to execute on Carlisle’s growth strategies and hit the ground running in post-merger integration.

And then there’s a big important lesson in realizing that, as a CEO, you don’t have much time post-acquisition-announcement before you have to show performance. In my experience, I can tell you it’s not a lot of time, maybe two quarters. To help ensure we deliver on our value-realization timing for the deal, I’ll be very familiar with the deal model to be sure the synergies and assumptions are stretch but achievable. For integration, we use a two-in-the-box model, pairing a Carlisle leader with one from the acquired company to jointly deliver on the hard synergies, and ensure it happens very quickly and meets published goals. That speed to deliver on goals builds confidence with investors that you know what you’re doing and that the deal made sense.

Q: I’m hearing you say, boy, you’ve got to realize most of those synergies in 12 to 18 months because if you can’t get it in that period, it just gets harder over time, things get stale.

Koch: I think that’s true. I think investors view it as a “show me the money” kind of thing. They’d say, “I got your deal model. You came out and told me why you were going to spend this money and how it fits into your strategic plan. You justified the price as a multiple of earnings, and typically at a premium. Now, it’s like, OK, well … where is the return? You said it was such a good deal, and now it’s been two quarters, and we need to see you proving out the deal thesis.”

Q: As a CEO, you can’t expect to take a hands-on approach and be involved in the day-to-day decisions in the critical integration process. What processes do you set up to engage with integration teams and ensure the right decisions are made and in the right cadence?

Koch: Well, the two-in-the-box approach takes a lot of the anxiety out of the acquired organization. I think it also helps that I’m involved from the start and visible—visiting sites, selecting teams, reviewing integration plans, and tracking execution through regular IMO (Integration Management Office) meetings. I stay engaged post-close through biweekly steering committee meetings to ensure accountability and speed of action. In the beginning, integrations need corrective action quickly. You need to be helping them if it’s not working. You need to pivot quickly to something else or you need to figure out what resources you need. You want to be in those steering committee meetings because you don’t want to find out at the end of the quarter that things aren’t on track. By then, you’ve lost time and extended the gap to fix it. If you’re not careful, you’ll be six months out from resolution and you’re right back in that situation where your investors are going to be saying, “Hey, now tell me again, why was this a good deal?”

Q: There are deals you want to do but the company doesn’t want to sell. What do you do then?

Koch: I think it gets back to that idea of how do you really do any sales process? It really is a matter of staying in touch with the principals. Try to meet them at a trade show and let them know your interest. It’s just the personal stuff. Stay engaged. Develop trust. Continue to communicate why it’s in their best interest to sell. Play the long game. In one case, it took 10 years of our persistence. We bought the principal dinner every time he was in town for 10 years. It can also help to put them in touch with owners who have previously sold businesses to Carlisle. Let them ask them directly how it went for them. If valuation is the sticking point, we may suggest a pause in negotiations and agree to stay in touch to reassess positions as conditions change. And we just keep telling them again and again, “Hey, you know we’re still interested in your business.”

Q: You’ve obviously learned a lot about M&A over 28 acquisitions during your tenure as CEO. What would you not do today that you would have done in 2016?

Koch: The big one is that I wouldn’t do small deals. The “string of pearls” approach doesn’t work for us. Maybe private equity can do that well, but we don’t seem to extract as much value from that process as we do from bigger deals. Workload on the team matters as well. Integration for a small deal is just as much work as it is for a significant deal. Instead, I’d focus on meaningful acquisitions or innovative start-ups that are near-commercial and need scale. We just did a deal for Bonded Logic, which makes UltraTouch recycled denim insulation that replaces fiberglass. They’re in our space, and they needed a Carlisle. They had been banging on the door of Home Depot and couldn’t get the business rolling. Our team at Carlisle Weatherproofing Technologies integrated the team into our relationship with Home Depot, and things took off. Another thing I won’t do that I might have done in 2016 is that I won’t chase businesses without clear return on capital. Driving EPS growth is a part of the equation, but so is driving a high ROIC.

Q: Last year, you oversaw the sale of Carlisle Interconnect Technologies to Amphenol Corporation for more than $2 billion, aligning with Carlisle’s strategic pivot to a pure-play building products company. What’s the biggest and easiest misstep you could make when divesting?

Koch: I think the biggest misstep a CEO could make in their portfolio comes down to not making the decision to move forward with a divestiture. It can feel hard to give up revenue. And some CEOs don’t follow through with a divestiture because they let overly optimistic banker projections anchor their valuation expectations. We focus on 10-year ROIC. And if a business hasn’t cleared our cost of capital, we move on. I was really surprised, when we started divesting companies, how many people would be like, “This is crazy, nobody sells their businesses.” I’m like, why not?