DEFM14A: BGSF Seeks Shareholder Approval for $99 Million Sale of Professional Segment to INSPYR Solutions

Sentiment:

Definitive Proxy Statement 25 July 2025 8:31 PM

BGSF, Inc. is seeking stockholder approval for the sale of its Professional Division, including BG Finance and Accounting, Inc. and BGSF Professional, LLC, to INSPYR Solutions Intermediate, LLC for $99 million in cash, aiming to eliminate debt and invest in its remaining Property Management segment.

Capital raiseA&M Capital Partners III, LP and Alvarez & Marsal Partners Buyout Fund III, LP (the Investors) have committed an aggregate of $104,000,000 in cash to purchase equity securities of the Purchaser.This equity financing is solely for the purpose of, and to the extent necessary to, consummate the Sale.The Equity Financing Commitment Letter was entered into on June 14, 2025, concurrently with the Equity Purchase Agreement.The Purchaser has represented that it has sufficient unrestricted cash or immediately available funds (including from this commitment letter) to pay all amounts and consummate the transaction.

Better than expectedThe $99,000,000 cash consideration for the Professional Segment is explicitly stated by the Board as representing the 'best value' to BGSF's stockholders on a time and risk-adjusted basis compared to all other proposals received.The offer is not contingent on debt financing, as an affiliated investment fund will provide committed equity, reducing transaction risk and increasing certainty of closing.The sale proceeds are earmarked to substantially eliminate outstanding debt and invest in the remaining Property Management segment, addressing key financial and strategic objectives.

Summary

BGSF, Inc. entered into an Equity Purchase Agreement on June 14, 2025, to sell its Professional Division (including BG Finance and Accounting, Inc. and BGSF Professional, LLC) to INSPYR Solutions Intermediate, LLC for $99,000,000 in cash, subject to adjustments.
The sale encompasses the transfer of certain assets and liabilities related to BGSF's Professional Division, and the sale of equity interests in foreign subsidiaries (Micro Talent, SAS and 99% of Arroyo IT Solutions PL) to an affiliate of the Purchaser.
BGSF's Board of Directors unanimously approved the Sale and recommends stockholders vote FOR the Sale Proposal, the Compensation Proposal (advisory, non-binding), and the Adjournment Proposal.
The approval of the Sale Proposal requires the affirmative vote of a majority of outstanding common stock entitled to vote.
Net proceeds from the sale are intended to substantially eliminate outstanding debt and make investments in the remaining Property Management segment.
Following the sale, BGSF will continue to operate as a public company, focusing solely on its Property Management segment.
Houlihan Lokey Capital, Inc. provided an opinion on June 13, 2025, that the $99 million consideration is fair to BGSF from a financial point of view.

Sentiment

Score: 7

Explanation: The sale of the Professional Segment for $99 million is a significant strategic move aimed at debt reduction and focusing on the core Property Management business. The Board unanimously recommends it as the 'best value' among proposals, and a financial advisor deemed the price 'fair.' However, shareholders will not receive direct proceeds, and there are risks related to NYSE listing standards post-sale due to reduced size, and potential litigation.

Positives

The sale is expected to generate $99,000,000 in cash, providing certainty of value.
Net proceeds from the sale will be used to substantially eliminate outstanding debt.
Proceeds will also be used to make investments in the Property Management segment, which will be the retained business.
The Board unanimously determined the sale is advisable, fair, and in the best interests of BGSF and its stockholders.
The Purchaser's offer represented the best value to BGSF's stockholders on a time and risk-adjusted basis compared to all other proposals received.
The transaction is not subject to a debt financing contingency, as an affiliated investment fund will provide committed equity financing.
Houlihan Lokey Capital, Inc. rendered an opinion that the consideration is fair from a financial point of view.
No material unfair labor practice charges, grievances, arbitrations, strikes, or other labor disputes are pending or threatened since December 31, 2021.
No material non-compliance with Trade Controls or Anti-Corruption Laws has been identified through notices, inquiries, or investigations.
No material breach of contract, indemnification, or similar claims from Material Customers or Material Technology Partners have been asserted against the Professional Segment in the last three years that remain unresolved.

Negatives

BGSF stockholders will not directly receive any proceeds from the sale.
The company's business will be significantly smaller post-sale, which may affect its ability to satisfy NYSE's continued listing standards, potentially leading to delisting.
The announcement and pendency of the sale create uncertainty about BGSF's future, which could have a material adverse effect on its business, financial condition, and results of operations.
If the sale is not completed, BGSF may have difficulty recouping incurred costs and may be required to pay a Seller Termination Fee of $2,970,000 or an Expense Reimbursement of up to $3,000,000.
The financial advisor's opinion does not reflect changes in circumstances after its June 13, 2025, date.
BGSF was not in compliance with certain financial and affirmative covenants under its existing credit agreement as of December 29, 2024, and March 30, 2025.

Risks

The Sale is subject to Required Stockholder Approval and other closing conditions, and may not be completed as anticipated or at all.
The announcement and pendency of the Sale, whether or not consummated, creates uncertainty about BGSF's future, which could have a material adverse effect on its business, financial condition, and results of operations.
Failure to complete the Sale may impact BGSF's ability to implement its future business plans.
If the Sale is not completed, BGSF may explore other potential transactions, but alternatives may be less favorable.
Failure to complete the Sale may impact BGSF's business, financial condition, and results of operations.
Future results following the Sale may differ materially from the unaudited pro forma consolidated financial information included in the Proxy Statement.
BGSF stockholders will not receive any of the proceeds of the Sale.
The opinion obtained by the BGSF Board of Directors from its financial advisor does not and will not reflect changes in circumstances after the date of such opinion.
Transactions such as the Sale are often subject to lawsuits by stockholders, which could result in substantial costs and divert management's attention from other business concerns.
The ability to execute on business strategies for the Retained Business depends on the retention and recruitment of qualified executives and other professionals, and the Sale may lead to higher employee turnover.
Reduced revenues and assets following the Sale may affect BGSF's ability to satisfy NYSE's continued listing standards, which could result in the delisting of its common stock.

Future Outlook

BGSF intends to use the net proceeds from the sale to substantially eliminate its outstanding debt and make investments in its Property Management segment. The Board of Directors plans to work with its financial advisors to determine the best use of the remaining proceeds to increase stockholder value while continuing to evaluate strategic alternatives. Following the completion of the Sale, BGSF will continue to operate as a public company under the name BGSF, Inc., with all its revenues and income generated by the Retained Business (Property Management segment).

Management Comments

The Board of Directors of BGSF has unanimously approved the Sale and the other transactions and agreements contemplated by the Equity Purchase Agreement, and recommended that its stockholders approve the Sale.
After careful consideration, our Board of Directors unanimously recommends that you vote FOR the Sale Proposal, the Compensation Proposal and the Adjournment Proposal.
BGSF intends to use the net proceeds from the Sale to substantially eliminate its outstanding debt and to make investments in its Property Management segment. The BGSF Board of Directors intends to work with its financial advisors to determine the best use of the remaining proceeds to increase stockholder value while continuing to evaluate strategic alternatives.
At this time, it is contemplated that, immediately following Closing, BGSF will maintain the same corporate functions and the same senior executives and directors as BGSF had prior to the completion of the Sale.
The BGSF Board of Directors and the Compensation Committee will retain authority to continue Mr. Schroeder's and Ms. Brown's outstanding equity awards, and may consider changes to their respective compensation in connection with or in a prescribed period following the Sale, including, in Mr. Schroeder's case, changes in compensation arrangements in response to any circumstances that may constitute Good Reason as defined in his employment agreement. In addition, the BGSF Board of Directors and the Compensation Committee will review overall executive compensation and may consider changes to align such compensation with BGSF's go-forward business.

Industry Context

The transaction represents a strategic divestiture for BGSF, allowing it to streamline its operations by selling its Professional segment (IT, Managed Solutions, Finance & Accounting, Legal, and Human Resources staffing) to INSPYR Solutions, a technology and talent solutions provider. This move enables BGSF to focus entirely on its Property Management segment. The filing highlights BGSF's history of strategic acquisitions and divestitures, indicating a dynamic approach to portfolio management within the broader staffing and workforce solutions industry. The sale to a specialized player like INSPYR Solutions suggests a trend towards consolidation and specialization in the talent solutions market.

Comparison to Industry Standards

Houlihan Lokey's financial analysis included a 'Selected Companies Analysis' comparing BGSF's Professional Segment to publicly traded companies like ASGN Incorporated, Kforce Inc., and Robert Half Inc. The implied enterprise value to LTM Adjusted EBITDA multiples for these companies ranged from 8.2x to 10.9x (median 10.1x, mean 9.7x).
The analysis also included a 'Selected Transactions Analysis' of relevant M&A deals, with transaction value to LTM Adjusted EBITDA multiples ranging from 10.6x to 12.3x (median 11.2x, mean 11.4x). Notable comparable transactions included Computer Task Group, Incorporated (acquired by Cegeka Groep NV in August 2023), ettain Group, LLC (acquired by Manpowergroup Global Inc. in August 2021), and AKKA Technologies SE (acquired by Adecco Group AG in July 2021).
The $99 million consideration for the Professional Segment falls within the implied enterprise value reference range of $88.9 million to $111.1 million based on FY 2025E Adjusted EBITDA multiples, and is higher than the $61.2 million to $74.8 million range based on LTM Adjusted EBITDA multiples, as derived from the selected companies analysis.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Former Chair, President and Chief Executive Officer	Beth Garvey	N/A	July 1, 2025	Resigned to pursue other interests.
Interim Co-Chief Executive Officer	N/A	Kelly Brown	July 1, 2025	Appointed by the Board of Directors.
Interim Co-Chief Executive Officer, Chief Financial Officer, and Secretary	N/A (retained CFO/Secretary role)	Keith Schroeder	July 1, 2025	Appointed by the Board of Directors (in addition to existing roles).

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Board Approval and Recommendation	The Board of Directors unanimously approved the Equity Purchase Agreement and the Sale, determining it advisable, fair, and in the best interests of BGSF and its stockholders, and unanimously recommends stockholders vote FOR the Sale Proposal, Compensation Proposal, and Adjournment Proposal.	June 13, 2025	This unanimous approval and strong recommendation from the Board signals confidence in the transaction to shareholders and aligns the company's leadership with the proposed strategic direction.
Shareholder Vote Requirement	Approval of the Sale Proposal requires the affirmative vote of the holders of a majority of the outstanding shares of common stock entitled to vote, in accordance with Section 271 of the Delaware General Corporation Law (DGCL).	N/A (condition for closing)	This requirement ensures that a significant majority of shareholders directly endorse the transaction, which is crucial given its potential classification as a sale of substantially all of BGSF's assets.
Advisory Vote on Executive Compensation	Stockholders will cast a non-binding, advisory vote on compensation that may be paid or become payable to named executive officers in connection with the Sale, as required by Section 14A of the Exchange Act.	September 4, 2025 (Special Meeting)	This advisory vote provides a mechanism for shareholder feedback on executive compensation arrangements tied to the transaction, promoting transparency and accountability, though the vote itself is non-binding.
Director and Officer Indemnification and Insurance	Purchaser will cause the acquired companies to indemnify D&O Indemnified Parties for six years post-closing and maintain D&O insurance or purchase a D&O Tail Policy for six years, with premiums capped at 300% of the most recent annual premium.	Closing Date	This provision ensures continued protection for former directors and officers of the divested entities against liabilities arising from their service prior to the closing, which is a standard practice in M&A to mitigate personal liability risks and facilitate transactions.

Related Party Transactions

All Affiliate Contracts, Intercompany Agreements and Accounts, and any other arrangements or understandings between BGSF or its subsidiaries (other than the acquired companies) and any acquired company will be settled, eliminated, terminated, or canceled prior to or upon the Closing, without any ongoing liabilities or obligations to the Purchaser or its affiliates (including the acquired companies) or BGSF or its subsidiaries.

Stakeholder Impact

**Shareholders**: Will not directly receive any proceeds from the sale. Their approval is required for the transaction. There is a risk that the reduced size of the company post-sale could affect its ability to meet NYSE listing standards, potentially leading to delisting. There is also a risk of stockholder lawsuits related to the transaction.
**Employees (Professional Segment)**: None of the three named executive officers are expected to transfer with the divested business. Certain executive officers have financial interests in the sale, including vesting or acceleration of equity compensation and potential severance payments. The company anticipates potential higher employee turnover and challenges in retaining/recruiting key personnel due to the transaction's uncertainty.
**Employees (Retained Business)**: The employment of the interim Co-Chief Executive Officers (Keith Schroeder and Kelly Brown) is not expected to be terminated. Their compensation arrangements may be reviewed and potentially adjusted post-sale.
**Customers and Suppliers**: The announcement and pendency of the sale could adversely affect BGSF's relationships with its customers and business partners.
**Creditors**: The net proceeds from the sale are intended to substantially eliminate BGSF's outstanding debt, which is a positive outcome for creditors.

Next Steps

Hold a special meeting of stockholders on September 4, 2025, to vote on the Sale Proposal, Compensation Proposal, and Adjournment Proposal.
Obtain the Required Stockholder Approval (affirmative vote of a majority of outstanding common stock) for the Sale Proposal.
Satisfy or waive all other customary closing conditions outlined in the Equity Purchase Agreement.
Complete the closing of the Sale, expected on the third business day following the satisfaction or waiver of all closing conditions, anticipated in the second half of 2025.
BGSF will begin reporting the Professional Segment as discontinued operations in its consolidated financial statements, starting with the Quarterly Report on Form 10-Q for the period ended June 29, 2025.
The BGSF Board of Directors will work with its financial advisors to determine the best use of the remaining proceeds to increase stockholder value and continue evaluating strategic alternatives.

Key Dates

Date	Description
November 2023	BGSF Board of Directors began exploring potential strategic alternatives, including a sale of the Professional segment.
December 2023	BGSF retained Houlihan Lokey as its exclusive financial advisor for strategic alternatives evaluation.
May 2024	BGSF announced evaluation of strategic alternatives and suspended its quarterly cash dividend.
May 21, 2024	BGSF entered into a confidentiality agreement with A&M Capital Advisors, LP (an affiliate of Purchaser).
May 23, 2024	BGSF entered into a confidentiality agreement with Entity A.
June 2024	BGSF provided confidential information to certain interested third parties.
June 27, 2024	BGSF Board received a preliminary non-binding indication of interest from A&M Capital Advisors in partnership with INSPYR Solutions.
June 28, 2024	BGSF Board received a preliminary non-binding indication of interest from Entity A.
July 2024	Twelve in-person management presentations were held in the Dallas-Fort Worth metroplex.
August 20, 2024	BGSF Board received a preliminary non-binding proposal from Entity A.
September 30, 2024	Entity A circulated a revised draft of the equity purchase agreement to BGSF.
October 2, 2024	BGSF Board evaluated the preliminary non-binding proposal from Entity A with Houlihan Lokey.
October 8, 2024	Norton Rose provided a key issues list to BGSF regarding Entity A's revised draft equity purchase agreement.
October 9, 2024	BGSF Board received a revised preliminary non-binding proposal from Entity A with a reduced purchase price.
October 15, 2024	BGSF Board evaluated Entity A's revised proposal and unanimously concluded it significantly undervalued the Professional segment.
March 13, 2025	Houlihan Lokey re-engaged with Entity A; Douglas E. Hailey (BGSF Director) held a conference call with a representative of Entity A to discuss re-engagement.
March 25, 2025	Norton Rose provided a revised key issues list to BGSF regarding Entity A's draft equity purchase agreement.
March 28, 2025	Entity A had a virtual due diligence meeting with BGSF.
March 30, 2025	Unaudited pro forma consolidated balance sheet date.
March 31, 2025	Entity A submitted a key issues list to Houlihan Lokey.
April 3, 2025	Entity A submitted a revised non-binding proposal; A&M Capital Advisors in partnership with INSPYR Solutions submitted an indication of interest for $65 million cash.
April 9, 2025	BGSF Board evaluated the revised non-binding proposal from Entity A and alternatives.
April 10, 2025	Entity A submitted another revised non-binding proposal and a draft exclusivity letter for a 90-day period.
April 11, 2025	Douglas E. Hailey held a virtual meeting with Alex Nivelle of A&M Capital Advisors to discuss a potential transaction and purchase price.
April 14, 2025	Norton Rose revised the draft exclusivity letter to a 30-day period for Entity A.
April 15, 2025	A&M Capital Advisors communicated interest in making an offer with committed equity financing.
April 16, 2025	BGSF Board received a letter of intent from A&M Capital Advisors in partnership with INSPYR Solutions for $97 million cash.
April 17, 2025	Houlihan Lokey provided a draft of the equity purchase agreement to A&M Capital Advisors.
April 18, 2025	Houlihan Lokey informed Entity A of another proposal; Norton Rose submitted a revised draft letter of intent proposing an increased cash purchase price of $99 million to A&M Capital Advisors.
April 20, 2025	BGSF Board received a revised draft of the letter of intent from A&M Capital Advisors in partnership with INSPYR Solutions, proposing $99 million cash.
April 21, 2025	BGSF Board approved the revised draft letter of intent by unanimous written consent; the letter of intent was executed and delivered by A&M Capital Advisors and BGSF.
May 24, 2025	Kirkland & Ellis LLP (K&E) submitted a revised draft equity purchase agreement and a draft two-week exclusivity extension.
May 25, 2025	BGSF and A&M Capital Advisors executed and delivered the exclusivity extension.
June 8, 2025	K&E submitted a draft four-day exclusivity extension; BGSF and A&M Capital Advisors executed and delivered the exclusivity extension.
June 13, 2025	Houlihan Lokey orally rendered its fairness opinion to the BGSF Board; the BGSF Board adopted resolutions approving the Equity Purchase Agreement and recommending the transaction.
June 14, 2025	The Equity Purchase Agreement, Equity Financing Commitment Letter, and Limited Guaranty were executed and delivered. Beth Garvey entered into a Separation Agreement.
June 16, 2025	BGSF notified the New York Stock Exchange of the transactions and issued a press release publicly announcing the execution of the Equity Purchase Agreement.
July 1, 2025	Beth Garvey's resignation as director and officer became effective; Kelly Brown and Keith Schroeder were appointed interim Co-Chief Executive Officers.
July 14, 2025	Latest practicable date prior to the filing of the Proxy Statement, used as the assumed consummation date for executive compensation calculations.
July 18, 2025	Record date for stockholders entitled to notice of and to vote at the special meeting.
July 25, 2025	Date of the Definitive Proxy Statement.
August 6, 2025	Approximate date of first mailing of the Proxy Statement to stockholders.
September 4, 2025	Date of the Special Meeting of Stockholders.
November 10, 2025	End Date for consummation of the Sale.
December 27, 2021	Date as if the Sale had been completed for the unaudited pro forma consolidated statement of operations.
June 29, 2025	Quarter ending date from which the Professional Segment results will be reported as discontinued operations in consolidated financial statements.

Recommendation

hold

The sale of the Professional Segment for $99 million is a significant strategic shift for BGSF, aimed at debt reduction and focusing on the Property Management segment. While the cash consideration is deemed 'fair' and the 'best value' compared to other offers, and the debt reduction is a positive, the immediate impact on shareholders is not a direct cash distribution. The future performance of the smaller, focused Property Management business is yet to be fully realized, and there's a risk of NYSE delisting due to reduced size. An investor should 'hold' to observe the execution of the new strategy, the financial performance of the retained business, and the company's ability to maintain its public listing and generate value from the remaining proceeds.

Keywords

Equity Purchase Agreement, Divestiture, Professional Services, Staffing Industry, Property Management, SEC Filing, Proxy Statement, Corporate Action, Debt Reduction, Strategic Alternatives, Shareholder Vote, M&A, INSPYR Solutions, BGSF

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