BGSF Bolsters Proxy Amid Lawsuits Over $99M Professional Division Sale

TL;DR

**BGSF is fighting shareholder lawsuits over its $99M Professional Division sale, but the supplemental disclosures should clear the path for the deal to close on September 4, 2025.**

AI Summary

BGSF, Inc. filed a DEF 14A supplement on August 28, 2025, to its Definitive Proxy Statement dated July 25, 2025, concerning the sale of its Professional Division for $99,000,000 in cash to INSPYR Solutions Intermediate, LLC. This supplement addresses two lawsuits filed on August 13, 2025, by John Thompson and Richard Williams in the Supreme Court of the State of New York, alleging omissions and misrepresentations in the original proxy statement regarding financial valuation analyses, potential conflicts of interest for Houlihan Lokey, and the background of the Sale. BGSF also received multiple stockholder demand letters seeking additional disclosures. To mitigate risks of delay and minimize legal expenses, BGSF is voluntarily providing supplemental disclosures, including details about confidentiality agreements with standstill provisions entered into with AM Capital Advisors, LP and Entity A in May 2024. The supplement also clarifies Houlihan Lokey's prior and current financial advisory services to affiliates of AM Capital Partners, unrelated to the current transaction. Furthermore, it provides detailed financial analyses from Houlihan Lokey, including selected companies analysis with an implied enterprise value range of $61.2 million to $74.8 million based on LTM Adj. EBITDA and $88.9 million to $111.1 million based on FY 2025E Adj. EBITDA, and selected transactions analysis indicating an implied enterprise value range of $68.0 million to $81.6 million, all compared to the $99.0 million sale consideration.

Why It Matters

This DEF 14A supplement is crucial for BGSF investors as it addresses shareholder litigation and demand letters challenging the transparency and fairness of the $99 million sale of its Professional Division. The lawsuits allege material omissions regarding the financial advisor's valuation and potential conflicts of interest, which could impact investor confidence and the deal's approval. For employees and customers, the sale's completion and the associated legal challenges introduce uncertainty regarding future operations and service continuity. In a competitive staffing and solutions market, transparency around such significant transactions is paramount, and these disclosures aim to ensure the deal proceeds without further legal hurdles, potentially setting a precedent for how similar transactions are communicated.

Risk Assessment

Risk Level: medium — The risk level is medium due to ongoing litigation from John Thompson and Richard Williams, and multiple stockholder demand letters, alleging material omissions in the Definitive Proxy Statement. While BGSF believes the allegations are without merit and is making voluntary disclosures, the lawsuits seek injunctive relief and rescission of the Sale, which could delay or even prevent the $99,000,000 transaction from closing.

Analyst Insight

Investors should review the supplemental disclosures carefully, particularly the details regarding Houlihan Lokey's potential conflicts and the valuation methodologies. Given BGSF's intent to proceed with the Special Meeting on September 4, 2025, and its denial of wrongdoing, investors who support the sale should ensure their proxies are submitted promptly.

Key Numbers

• $99,000,000 — Cash consideration for the Sale (Price for BGSF's Professional Division)
• September 4, 2025 — Date of Special Meeting (Stockholders to vote on the Sale)
• July 25, 2025 — Filing date of Definitive Proxy Statement (Original document for the Sale)
• August 28, 2025 — Filing date of DEF 14A supplement (Date of current supplemental disclosures)
• 8.2x — Low Enterprise Value to LTM Adj. EBITDA multiple (From selected companies analysis for ASGN Incorporated)
• 12.6x — High Enterprise Value to FY 2025E Adj. EBITDA multiple (From selected companies analysis for Robert Half Inc.)
• $61.2 million to $74.8 million — Implied enterprise value range (LTM Adj. EBITDA) (Based on Houlihan Lokey's selected companies analysis)
• $88.9 million to $111.1 million — Implied enterprise value range (FY 2025E Adj. EBITDA) (Based on Houlihan Lokey's selected companies analysis)
• 10.6x — Low Transaction Value to LTM Adjusted EBITDA multiple (From selected transactions analysis for AKKA Technologies SE)
• $68.0 million to $81.6 million — Implied enterprise value range (Selected Transactions) (Based on Houlihan Lokey's selected transactions analysis)

Key Players & Entities

• BGSF, Inc. (company) — Registrant and seller of Professional Division
• INSPYR Solutions Intermediate, LLC (company) — Purchaser of BGSF's Professional Division
• John Thompson (person) — Plaintiff in lawsuit against BGSF
• Richard Williams (person) — Plaintiff in lawsuit against BGSF
• Houlihan Lokey (company) — BGSF's financial advisor providing fairness opinion
• AM Capital Advisors, LP (company) — Affiliate of Purchaser, entered confidentiality agreement with BGSF
• Norton Rose (company) — Assisted BGSF with confidentiality agreements
• D.F. King (company) — BGSF's proxy solicitor
• SEC (regulator) — Securities and Exchange Commission
• Supreme Court of the State of New York, County of New York (regulator) — Court where lawsuits were filed

FAQ

Risk Factors

• Shareholder Lawsuits Alleging Disclosure Omissions [medium — legal]: Two lawsuits were filed on August 13, 2025, alleging that the Definitive Proxy Statement omits or misrepresents material information regarding financial valuation analyses, potential conflicts of interest for Houlihan Lokey, and the background of the Sale. Stockholder demand letters also seek additional disclosures. BGSF believes the allegations are without merit but is providing supplemental disclosures to mitigate risks of delay and minimize legal expenses.
• Potential Conflicts of Interest for Financial Advisor [medium — legal]: Shareholder lawsuits allege misrepresentations concerning potential conflicts of interest for Houlihan Lokey, the financial advisor. Houlihan Lokey disclosed that it and its affiliates have provided and are currently providing services to AM Capital Partners, an affiliate of the Purchaser, for which they have received or expect to receive compensation. These services are stated to be unrelated to the current transaction.
• Accuracy of Financial Valuation Analyses [medium — legal]: Lawsuits allege omissions and misrepresentations in the Definitive Proxy Statement concerning the data and inputs underlying the financial valuation analyses performed by Houlihan Lokey. These analyses, including selected companies and selected transactions, provided implied enterprise value ranges that were generally below the $99,000,000 sale consideration.

Industry Context

BGSF operates in the staffing and workforce solutions industry, which is highly competitive and sensitive to economic cycles. The industry includes a wide range of companies, from large diversified players to niche specialists. Trends include the increasing demand for specialized skills, the rise of contingent workforces, and the adoption of technology to enhance recruitment and management processes. The sale of the Professional Division suggests a strategic shift by BGSF, potentially to focus on other segments of the staffing market or to streamline operations.

Regulatory Implications

The filing of a DEF 14A supplement indicates BGSF's response to regulatory scrutiny and shareholder concerns regarding disclosure adequacy. The lawsuits and demand letters highlight the importance of accurate and complete financial reporting and valuation analysis in material transactions. Failure to comply with SEC disclosure rules can lead to litigation, reputational damage, and potential delays in corporate actions.

What Investors Should Do

1. Review the DEF 14A Supplement
2. Consider the Implied Valuation Ranges
3. Evaluate Potential Conflicts of Interest
4. Monitor Litigation Developments
5. Confirm Voting Instructions

Key Dates

• 2025-08-28: Filing of DEF 14A Supplement — Provides supplemental disclosures in response to shareholder lawsuits and demand letters, addressing valuation analyses, conflicts of interest, and confidentiality agreements.
• 2025-08-13: Filing of Shareholder Lawsuits — Two lawsuits filed in the Supreme Court of the State of New York alleging omissions and misrepresentations in the original proxy statement regarding the sale.
• 2025-07-25: Filing of Definitive Proxy Statement — Original document detailing the proposed sale of the Professional Division and seeking shareholder approval.
• 2025-06-14: Execution of Equity Purchase Agreement — Agreement for the sale of BGSF's Professional Division to INSPYR Solutions Intermediate, LLC for $99,000,000.
• 2025-09-04: Special Meeting of Stockholders — Stockholders are scheduled to vote on the proposed sale of the Professional Division.
• 2024-05-21: Confidentiality Agreement with AM Capital Advisors, LP — One of several confidentiality agreements entered into with potential acquirors, containing standstill provisions.

Glossary

DEF 14A

A filing with the SEC that provides definitive proxy materials to shareholders, typically for annual meetings or special events like mergers or acquisitions. (This document is a supplement to BGSF's definitive proxy statement, providing additional information to shareholders regarding the proposed sale of its Professional Division.)

Equity Purchase Agreement

A contract detailing the terms and conditions under which one party agrees to purchase the equity interests of another company or division. (This is the agreement governing the sale of BGSF's Professional Division to INSPYR Solutions Intermediate, LLC for $99,000,000.)

Standstill Provisions

Clauses in confidentiality agreements that restrict a potential acquirer from taking certain actions, such as making unsolicited takeover bids or publicly disclosing their interest, for a specified period. (These provisions were included in confidentiality agreements with potential acquirors, including AM Capital Advisors, LP, to manage the sale process.)

Adj. EBITDA

Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization. This metric is often used to provide a clearer picture of a company's operating performance by excluding certain non-recurring or non-cash items. (Used by Houlihan Lokey in its financial analyses to determine implied enterprise value ranges for the Professional Division.)

LTM

Last Twelve Months. Refers to the financial performance of a company over the most recent 12-month period. (Used in conjunction with Adjusted EBITDA (LTM Adj. EBITDA) to evaluate the division's historical financial performance in valuation analyses.)

FY 2025E

Fiscal Year 2025 Estimate. Refers to the projected financial performance for the fiscal year ending in 2025. (Used in conjunction with Adjusted EBITDA (FY 2025E Adj. EBITDA) to evaluate the division's projected financial performance in valuation analyses.)

Year-Over-Year Comparison

This filing is a supplement to the July 25, 2025 Definitive Proxy Statement, not a comparison to a prior year's filing. The supplement addresses new information arising from shareholder litigation and demand letters concerning the proposed sale of the Professional Division. It provides additional details on financial valuation analyses, potential conflicts of interest for the financial advisor, and confidentiality agreements, which were not as extensively detailed in the original proxy statement.

Key Financial Figures

• $99,000,000 — and BGSF Professional to Purchaser, for $99,000,000 in cash (subject to adjustment as descr
• $61.2 million — ue reference ranges for the Business of $61.2 million to $74.8 million based on the selected
• $74.8 million — es for the Business of $61.2 million to $74.8 million based on the selected range of multiple
• $88.9 million — e month period ended April 30, 2025 and $88.9 million to $111.1 million based on the selected
• $111.1 million — ded April 30, 2025 and $88.9 million to $111.1 million based on the selected range of multiple
• $99.0 million — ase as compared to the consideration of $99.0 million in the Sale pursuant to the Purchase Ag
• $68.0 million — lue reference range for the Business of $68.0 million to $81.6 million, as compared to the co
• $81.6 m — ge for the Business of $68.0 million to $81.6 million, as compared to the consideration

Filing Documents

• def14asupplement.htm (DEF 14A) — 69KB
• image.jpg (GRAPHIC) — 84KB
• image1.jpg (GRAPHIC) — 36KB
• 0001474903-25-000105.txt ( ) — 235KB

Forward-Looking Statements

Forward-Looking Statements This supplement contains forward-looking statements within the meaning of U.S. federal securities laws. Such forward-looking statements include, but are not limited to, statements regarding the proposed transaction, obtaining customary shareholder approval, satisfying closing conditions, the closing, including its timing, of the sale of BGSF, Inc.'s Professional Division, the use of proceeds of the sale, the projected operational and financial performance of BGSF and its various subsidiaries, including following the sale of BGSF's Professional Division, its offerings of services and solutions and developments and reception of its services and solutions by client partners, and BGSF's expectations, hopes, beliefs, intentions, plans, prospects, or strategies regarding the future revenue and the business plans of BGSF's management team. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. In addition, any statements that refer to projections, forecasts, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipate," "believe," "continue," "could," "endeavor," "estimate," "expect," "intends," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "will," "would," and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements contained in this supplement are based on certain assumptions and analyses made by the management of BGSF considering their respective experience and perception of historical trends, current conditions, and expected future developments and their potential effects on BGSF as well as other factors they believe are appropriate in the circumstances. There can be no assurance that future developments affecting BGSF will be th

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