Array positions itself as your support team so that all the recognition goes to you.  Our role is to do the best we can for the CPA’s clients while making your practice shine. 

At Array Partners, our comprehensive Family Office Services Division helps CPA firms to: 

• Offer a new, strategic service line to their best clients so that you are paid what you are worth, 

• Increase revenues, profits, and firm value without adding staff or losing control of clients, and 

• Differentiate your firm and create a more loyal client base. 

Here is a sampling of client projects completed by Array Partners in concert with its extended network and CPA partner firms to give you a feel for how your clients can benefit. 

When a Client Tells You They Sold Their Company . . . After the Fact 

Many CPAs have received a call where the client says something like, “Hey, I wanted to let you know we sold the business last week. Things were happening really fast, and we didn’t have a chance to bring you in on the front end. Is there anything you need from us?” 

In this case the business was a software company worth over $20 million. The partners rolled half of their equity into the new firm on a tax-deferred basis, but they still had a tax liability of $1.2 million per partner this year. The CPA brought this to our attention and asked if we had any ideas.  

We began by surveying partners individually and discovered that each one had slightly different desired outcomes. We developed a different multi-phase solution for each partner, which the CPA vetted.  Then, he led the discussions with the partners. (See our recent blog entry for more background on the solutions.)   

Together, the clients were able to reduce their combined $2.4 million tax bill to just under $1 million and have a plan in place to avoid the tax consequences of the future sale of highly appreciated assets. The CPA made $20,000 for about eight hours' work and improved his relationships with his clients.  In addition, he is positioned for future work.  

 Minimizing Family Taxes on the Disposition of a Commercial Building with Virtually a Zero Cost Basis      

A family was about to sell a commercial building that they had owned for over 40 years.  The sales price was in excess of $4 million, and the basis was virtually zero due to the extended period of ownership.  As a result, virtually the entire sales price was going to be taxed. (The potential tax liability exceeded $2 million in federal and state taxes).   

The family wanted to minimize the tax implications, but also wanted to reproduce the income that they had been receiving from the building.  They were also not interested in owning more real estate in which they would have to take an active management role, and, for that reason, they had already ruled out a 1031 exchange. 

After reviewing a variety of alternatives with the family, they agreed to the top recommendation – a 1031 exchange into a portfolio of passively owned real estate. Using this approach, we were able to avoid immediate taxation on the transaction while maintaining the income stream that was so important to the family.  Rather than owning a single commercial property, the family then owned fractional interests in eight different properties around the country (multifamily, healthcare, specialty retail, industrial).   

We were able to assist the family in achieving all of its goals by utilizing a solution that they did not know existed. It diversified their holdings geographically and by property type.  Importantly, the interests were passive interests requiring no active management on the part of the family.  Moreover, the ownership preserved the ability to achieve a step-up cost basis at death, accomplishing an important, but unstated, goal for the family. 

 Freeing Up Cash for College While Securing a Business Owner’s Retirement with a Comprehensive Analysis and by Leveraging a Network of Experts

On a pilot project with a CPA, we were introduced to “John,” a successful businessman and one of the firm’s best clients. He agreed to a no-obligation annual review and completed a short survey. He provided a business balance sheet and tax returns, and we chatted about his biggest concerns including asset protection, retirement, and feeling constrained by funding college for his twins.    

Using a combination of four advanced strategies, we proposed to:  

• reduce his taxable gross income,  

• increase the amount of his itemized deductions,  

• reposition some of the tax savings into a supplemental creditor-protected retirement vehicle that will generate annual income of just over $125,000 tax-free beginning at age 70, and  

• free up cash to increase spendable income.  

John, our CPA’s client, now has a secure retirement and an extra $48,000 a year of spendable income with funds that he was overpaying to vendors and the IRS. The CPA now receives additional annual fees to oversee and provide an expert opinion on John’s business and finances. In addition, the CPA has already received three quality referrals from John based on the success of this program. 

Recent Case Studies of Success for Our CPA Partners

 Harvesting the Potential of Growth by Acquisition    

An entrepreneurial CPA in the Southeast wanted to grow by acquisition, and he acquired interests in two established firms in a mid-sized city. The firms had a base of wealthier, long-time tax clients, but the selling partners were retiring and their attention to predictable processes and superior service had slipped. The CPA knew he needed to get to know his new clients and gain their trust as their relationship manager through an initial tax season. 

He recognized that the next steps were going to be harder, so he partnered with the team at Array. With their support, he redesigned the firm workflows and hired a tax manager to ensure consistent delivery and superior service for the existing tax businesses. 

Next, with Array, he identified the better clients and started a process of introducing Family Office capabilities. Quickly, he engaged these clients on new projects.  Now he is viewed by his more profitable clients as their first call when they have a major question.  

The Outcomes: He increased the overall profit of his firm on the way to doubling his take-home income.  

 Next Generation Partner Breaks Out of the Commodity Trap and Differentiates His Firm  

A multi-generational firm in the Northeast located in a smaller town was in a funk. Many of its bread-and-butter clients were selling their businesses or moving to warmer states and taking their business with them. This trend was largely driven by an unfavorable tax and weather climate in their state. In fact, firm revenues had not changed in over a decade.  The results: Everyone was working harder, and clients were very price-sensitive to their core tax services. 

More out of desperation rather than inspiration, the youngest generation CPA partner brought in Array Partners for an initial survey of the wealthier client base. They started with an initial project which was uncovered by the surveys, and each quarter they added more projects. After a year the younger partner started getting referrals to new clients and even more highly profitable projects. 

The Outcome: The firm is now poised for its best year ever, has gained mindshare with its better clients so that they are no longer price sensitive, and is repositioned from just another compiler of tax returns to a trusted expert. 

Get more information and see if the Array Partners model might be worth a test drive.