Deal Mechanic: Navis & TrimCo

TrimCo in 2005 was a small Hong Kong-based supplier of care-and-content labels to apparel brands that manufactured in Southern China. It was a 30-year-old, family-owned shop that had reached a plateau – just the kind of business that appeals to Navis Capital Partners, a small-cap buyout firm based in Malaysia.

TrimCo was well-run by the founder, explains Bruno Seghin, senior partner at Navis. Cash flow was steady, but revenue growth and margins were little more than flat despite the surge of garment manufacturers setting up in China.

In 2005, Navis bought a majority stake in TrimCo for an equity cost of $11.1 million. During a seven-year holding period, top-line revenue grew 3.1x and EBITDA grew 3.3x. The firm divested TrimCo in 2012 in a sale to Partners Group, reporting a 10x exit. 

The exit result came in part from buying well, Seghin says. But the critical ingredient was the relationship between TrimCo’s founder and Navis. 

“Some founders say they agree with you, but inside they do not agree,” Seghin says. “But with TrimCo it worked perfectly. She saw we could help the business. We could find people, make acquisitions, talk to banks, things she didn’t do before.”

He believes the key to operational change is the receptivity of the entrepreneur. “We could give the best of ourselves because we felt that what we were doing was being recognised and we could add value. Then it becomes a virtuous circle.”

So what value did Navis add, exactly?


The small care-and-content tag attached to clothes and sport shoes may seem trifling, but it actually helps to regulate the entire  global garment industry. The tag, which is more difficult to copy than the garment itself, verifies product authenticity. Tags are produced by TrimCo for brand name clients in specific numbers that match a specific apparel production run. One tag goes to one item, giving the brand some control over outsourced production. 

The trouble was, TrimCo was manufacturing only in Hong Kong and shipping to Southern China factories – while garment manufacturing was popping up all over Asia. Navis, which is well-established in Southeast Asia, did some research to help identify the most relevant locations. It ended up bringing TrimCo into Thailand, Singapore, Malaysia, India and China, using its local channels to identify acquisition targets and recruit employees. As a result, employee numbers went from 83 in 2005 to 288 in 2011. Production output also grew by 1.62x during the same period.


Like most family-owned businesses in Asia, TrimCo had no second line management. In order to grow, particularly in the new markets it was entering, the business required professionals in key positions.

Navis brought in a chief financial officer and worked with her (all of TrimCo’s management are women) on developing a financial control system to track KPIs, explains Agnes Lee, Navis’ investment director. Previously, TrimCo had an external accountant and the company looked only at total sales and profits. The financial control system Navis introduced looked at product type and profit by region, which helped support board-level decisions, Lee says.

A marketing manager was also recruited to review how to improve service offerings to clients and sell to new markets. “TrimCo had a good margin and a good product, and we believed there must be more clients who liked what they do,” Seghin says.

Private equity’s role in recruiting management is crucial – but tricky, he explains. “The chemistry between new people and a company that has been running its own way for 30 years has to click in the first two minutes of the interview. It can be frustrating sometimes. You can introduce very good quality people, but the meeting goes badly and you have no recourse. We know there is no point to insist. We have to accept that the entrepreneur is very instinctive and thinks very quickly based on experience. We are the opposite.”

Management retention is also important, adds Lee. Both the CFO and marketing manager were put on incentive programs linked to performance targets, and as a result both women have stayed on at TrimCo.


TrimCo manufactures millions of tags per day, which go to dozens of different orders. At the same time, labels are becoming more complex. One mistake on the label and the shipment is blocked at customs, raising TrimCo’s costs. 

Navis saw that mistakes sometimes came from the tag ordering process, which was manual and clumsy. Customers would look at various websites for the constantly changing labelling regulations required by each destination country, then download the information and email it to TrimCo. 

The founder had an idea to make the ordering process more efficient through technology, but plans were not concrete and management was hesitant. Discussions with Navis led to the idea of implementing an information management system that centralised and simplified the whole supply chain, from order to delivery, including tracking. On this project, Navis acted as a supportive partner, encouraging management to realise the idea and backing them with expertise as needed. 

“Most entrepreneurs are risk-averse when we first meet them because all their eggs are in one basket,” Seghin says. “After Navis buys a controlling stake, they are able to de-risk and try new things because less is at stake – and they are not alone. That’s what we’ve brought, rather than the specific technical expertise.”

The IT system was the first in the label industry and it shored up TrimCo’s competitive advantage, Seghin believes. Big competitors were slow to do the same because only a small portion of their business was garment labels – while the small players competed on cost, not service. The IT platform was part of the reason some large brand name garment makers became TrimCo clients. 

“We took the business away from the big guys,” he says.


In April 2012, as Navis was about to exit TrimCo in a secondary sale to Partners Group, it closed the acquisition of a large UK-based label manufacturer it had been talking to for two years. On exit, Partners bought the company together with TrimCo. 

The add-on acquisition brought TrimCo a presence in the UK, Turkey, Romania and Bangladesh – key garment manufacturing markets. In addition, the integration will bring the UK manufacturer significant cost structure savings by using TrimCo’s Asia-based manufacturing, Seghin says.

Navis had already done full due diligence on the UK manufacturer, so Lee provided the buyer with a detailed integration plan that laid out the growth strategy.

“The UK target was totally complementary to TrimCo and gave the buyer reserve growth for the coming 2-3 years,” Seghin says.

The double acquisition increased the potential for problems. But Seghin says Navis was able to complete them together because it had built trust with the seller, which the Navis team had been in talks with, and the buyer, having worked with Partners Group for many years.