"No one should be forced to be in joint ownership." That principle guided an internal liquidity system Westwick helped set up for a family office of fifty cousins.
The mechanism is simple. Once a year, after the family office's annual accounts are published, an independent third party values one share of the office. During the following month, every family member can state their intention to buy or sell at that price. At the end of the window, the governing body of the office matches supply and demand. Where sellers exceed buyers, the office itself can temporarily absorb the imbalance using its own cash, carrying its own shares for a period if necessary.
The design deliberately avoids a free-pricing mechanism. One could argue such a mechanism would clear the market more efficiently. The family chose otherwise, because fairness matters more than theoretical efficiency. The point is to protect the family members who know the office well, and, even more, to protect those who do not. A clear, organised, annual process, known to everyone and available to everyone, does that.
For large families, a well-designed internal liquidity system is one of the strongest safeguards of long-term unity. It gives each family member the freedom to follow their own path. It ensures that ownership of the office remains in the hands of the family. And it preempts the slow-burning disputes that, in families without such a mechanism, corrode unity over decades.
Frequently asked questions
What is an internal liquidity mechanism in a family office?
An organised, annual market for shares of the family office, open to every family member. Once the accounts are published, an independent third party values one share; during the following month each member can state an intention to buy or sell at that price; the office's governing body then matches supply and demand, and can temporarily absorb an imbalance with its own cash. The point is that no one is forced to remain in joint ownership.
Why not let family members trade their shares at a freely negotiated price?
A free-pricing mechanism might clear the market more efficiently, but it favours the members who know the office best over those who do not. A single fair price, set independently and available to everyone at the same time, protects both. For large families, that fairness is what makes the mechanism a safeguard of unity rather than a source of dispute.