Capital Southwest Corporation (CSWC): Lienzo del Modelo de Negocio [Actualizado en Ene-2025]

Capital Southwest Corporation (CSWC) representa una potencia de inversión dinámica que transforma los paisajes comerciales del mercado medio a través de estrategias financieras innovadoras. Al ofrecer soluciones de capital flexibles y enfoques de inversión de pacientes, esta empresa de desarrollo de negocios navega por terreno de mercado complejo con precisión, apoyando empresas empresariales en diversas industrias. Su modelo de negocio único combina el despliegue de capital estratégico, la profunda experiencia en la industria y un compromiso con la asociación a largo plazo que los distingue en el ecosistema de inversión competitiva.

Capital Southwest Corporation (CSWC) - Modelo de negocios: asociaciones clave

Empresas de capital privado y capital de riesgo

Capital Southwest Corporation mantiene asociaciones estratégicas con las siguientes empresas de capital privado y capital de riesgo:

Empresa asociada	Enfoque de inversión	Tipo de colaboración
Kayne Anderson Capital Advisors	Inversiones en el mercado medio	Oportunidades de coinversión
PCCP, LLC	Inversiones inmobiliarias	Sindicación de capital
Lane Hamilton	Inversiones en el mercado privado	Aviso estratégico

Bancos de inversión y asesores financieros

Capital Southwest colabora con instituciones financieras especializadas:

• Raymond James & Asociado
• Stephens Inc.
• Piper Sandler
• Janney Montgomery Scott

Empresas de cartera en varias industrias

La cartera de Capital Southwest incluye inversiones en diversos sectores:

Industria	Número de compañías de cartera	Valor de inversión total
Tecnología	12	$ 156.4 millones
Cuidado de la salud	8	$ 94.2 millones
Servicios industriales	6	$ 87.6 millones
Productos de consumo	5	$ 63.1 millones

Redes de inversión de pequeñas empresas

Capital Southwest participa en las siguientes redes de inversión:

• Programa de la compañía de inversión de pequeñas empresas (SBIC)
• Asociación Nacional de Empresas de Inversión de Pequeñas Empresas (NASBIC)
• Asociación de capital de riesgo de Texas
• Consejo de Inversión Americana

Estadísticas de asociación clave:

• Inversiones totales de asociación: $ 401.3 millones
• Duración promedio de la asociación: 5.7 años
• Asociaciones de inversión activa: 31
• Cobertura geográfica: 18 estados

Capital Southwest Corporation (CSWC) - Modelo de negocio: actividades clave

Proporcionar deuda a largo plazo y capital de capital

A partir del cuarto trimestre de 2023, Capital Southwest Corporation tiene una cartera de inversión total de $ 462.1 millones. La cartera consta de:

Tipo de inversión	Valor total	Porcentaje
Inversiones de deuda	$ 352.6 millones	76.3%
Inversiones de renta variable	$ 109.5 millones	23.7%

Gestión de la cartera de inversiones

La gestión de la cartera implica una supervisión estratégica de las inversiones en varios sectores:

• Número de compañías de cartera: 45
• Tamaño promedio de la inversión: $ 10.3 millones
• Rendimiento promedio ponderado en inversiones de deuda: 12.4%

Identificar y evaluar posibles oportunidades de inversión

El proceso de detección de inversiones incluye:

Criterios de detección	Métrica
Ingresos anuales de empresas objetivo	$ 10 millones - $ 100 millones
Gama EBITDA	$ 3 millones - $ 20 millones
Industrias de enfoque	Servicios comerciales, atención médica, industrial

Proporcionar orientación estratégica a las compañías de cartera

Métricas de apoyo estratégico:

• Asientos de la junta celebrados: 22
• Roles de asesoramiento activo: 18 empresas
• Horas de soporte operativo: aproximadamente 1,200 anualmente

Mantener el cumplimiento regulatorio como empresa de desarrollo de negocios (BDC)

Métricas de cumplimiento:

Requisito regulatorio	Estado de cumplimiento
Relación de cobertura de activos	276% (mínimo requerido: 200%)
Distribuciones a los accionistas	90% de los ingresos imponibles
Presentaciones de la SEC trimestrales	Presentación 100% a tiempo

Capital Southwest Corporation (CSWC) - Modelo de negocio: recursos clave

Equipo experimentado de gestión de inversiones

Al 31 de diciembre de 2023, el equipo de gestión de inversiones de Capital Southwest Corporation estaba compuesto:

Posición	Número de profesionales
Profesionales de inversión senior	8
Miembros del equipo de inversión total	15

Capital financiero sustancial

Recursos financieros a partir del cuarto trimestre 2023:

Métrica financiera	Cantidad
Activos totales	$ 1.2 mil millones
Cartera de inversiones totales	$ 943.5 millones
Valor de activo neto	$ 715.2 millones

Extensas redes y relaciones de la industria

Composición de red de la industria:

• Compañías de cartera activas: 27
• Sectores cubiertos: atención médica, tecnología, servicios industriales
• Alcance geográfico: principalmente Estados Unidos

Procesos de evaluación de inversión patentados

Métricas de detección de inversiones:

• Evaluaciones anuales de acuerdos: Aproximadamente 300-400 inversiones potenciales
• Proceso de diligencia debida: Análisis integral de varias etapas
• Criterios de inversión Áreas de enfoque:
  • Potencial de crecimiento de ingresos
  • Calidad del equipo de gestión
  • Posicionamiento del mercado

Estrategia de inversión flexible en múltiples sectores

Diversificación de cartera de inversiones:

Sector	Porcentaje de cartera
Cuidado de la salud	35%
Tecnología	25%
Servicios industriales	20%
Otros sectores	20%

Capital Southwest Corporation (CSWC) - Modelo de negocio: propuestas de valor

Soluciones de capital flexibles para compañías de mercado medio

A partir del cuarto trimestre de 2023, Capital Southwest Corporation proporcionó capital de inversión por un total de $ 454.2 millones en 38 compañías de cartera. El tamaño promedio de la inversión oscila entre $ 10 millones y $ 30 millones por empresa del mercado medio.

Categoría de inversión	Cantidad total	Número de empresas
Inversión total de cartera	$ 454.2 millones	38 empresas
Tamaño de inversión promedio	$ 10- $ 30 millones	Por empresa

Enfoque de asociación estratégica a largo plazo

Capital Southwest mantiene un período promedio de tenencia de inversión de 7-10 años, lo que demuestra el compromiso con las asociaciones estratégicas a largo plazo.

• Duración de inversión típica: 7-10 años
• Participación activa de la junta en compañías de cartera
• Guía estratégica práctica

Experiencia en crecimiento y apoyo de reestructuración

En 2023, la corporación apoyó a las compañías de cartera con $ 67.3 millones en capital de crecimiento y inversiones de reestructuración.

Categoría de apoyo	Monto de la inversión
Capital de crecimiento	$ 42.1 millones
Reestructuración de inversiones	$ 25.2 millones

Capital del paciente con interferencia operativa mínima

Capital Southwest proporciona a capital del paciente una intervención operativa directa mínima, Mantener un enfoque de inversión no controlador.

• Típicamente estaca de capital minoritario: 20-40%
• Estructura de inversión no controladora
• Preservación de autonomía del equipo de gestión

Estructuras financieras personalizadas para diversas necesidades comerciales

La corporación ofrece múltiples instrumentos de financiación adaptados a requisitos comerciales específicos.

Instrumento de financiamiento	Asignación total en 2023
Deuda subordinada	$ 178.6 millones
Inversiones de renta variable	$ 275.6 millones

Capital Southwest Corporation (CSWC) - Modelo de negocios: relaciones con los clientes

Compromiso de la empresa de cartera activa

Capital Southwest Corporation mantiene una participación directa con 18 empresas de cartera activas a partir del tercer trimestre de 2023. El tamaño de inversión promedio por compañía de cartera es de $ 23.4 millones.

Métrico de compromiso	Valor
Compañías de cartera activas totales	18
Inversión promedio por empresa	$ 23.4 millones
Frecuencia de interacción trimestral	4-6 reuniones estratégicas

Enfoque de inversión consultiva

Capital Southwest proporciona consulta estratégica en múltiples sectores de inversión.

• Consulta del sector tecnológico: 35% de la cartera
• Aviso de inversión en salud: 25% de cartera
• Guía estratégica de fabricación: 20% de cartera
• Soporte de la industria de servicios: 20% de la cartera

Servicios de asesoramiento estratégico en curso

La corporación proporciona Servicios de asesoramiento estratégico integral con un valor de asesoramiento anual promedio de $ 1.2 millones por empresa de cartera.

Tipo de servicio de asesoramiento	Valor anual
Planificación estratégica	$450,000
Reestructuración financiera	$350,000
Optimización operacional	$400,000

Gestión de relaciones basada en el rendimiento

Capital Southwest rastrea métricas de rendimiento con protocolos de medición precisos.

• Seguimiento de crecimiento de ingresos de la compañía de cartera
• Ciclos de revisión de rendimiento trimestral
• Estrategias de mejora del rendimiento personalizadas

Comunicación e informes transparentes

La frecuencia y los detalles de los informes son críticos para la estrategia de relación de clientes de CSWC.

Característica de informes	Frecuencia
Informes financieros trimestrales	4 veces anualmente
Actualizaciones del tablero de rendimiento	Mensual
Revisión completa anual	1 vez por año

Capital Southwest Corporation (CSWC) - Modelo de negocios: canales

Interacciones del equipo de inversión directa

Capital Southwest Corporation mantiene 7 profesionales de inversión dedicados que se involucran directamente con las compañías de cartera y los posibles objetivos de inversión.

Tipo de canal	Número de profesionales	Interacciones anuales promedio
Equipo de inversión directa	7	124 reuniones de la compañía de cartera

Redes de asesoramiento financiero

La Compañía aprovecha 43 asociaciones de asesoramiento financiero estratégico en múltiples sectores.

• Conexiones de banca de inversión: 18
• Socios de red de capital privado: 12
• Redes de referencia de capital de riesgo: 13

Conferencias y eventos de la industria

Capital Southwest participa en 22 conferencias de la industria específicas anualmente.

Tipo de conferencia	Participación anual	Interacciones potenciales de acuerdo
Conferencias de inversión del mercado intermedio	12	87 interacciones potenciales de acuerdo
Conferencias de riesgo tecnológica	6	42 interacciones potenciales de acuerdo
Foros de inversión en salud	4	29 interacciones potenciales de acuerdo

Plataformas de relaciones con inversores en línea

Capital Southwest mantiene la participación digital en 3 plataformas principales en línea.

• Sitio web de relaciones con los inversores
• Sec Edgar Plataforma de archivo digital
• Canal de transmisión web trimestral de ganancias

Redes de referencia profesionales

La corporación mantiene relaciones con 62 fuentes de referencia profesionales en varios ecosistemas de inversión.

Categoría de red de referencia	Número de conexiones	Volumen de referencia anual
Firma legal	19	37 referencias potenciales de acuerdo
Firmas de contabilidad	16	29 referencias potenciales de acuerdo
Consultores de inversión	27	46 referencias potenciales de acuerdo

Capital Southwest Corporation (CSWC) - Modelo de negocios: segmentos de clientes

Empresas del mercado medio inferior

Capital Southwest se centra en empresas con valores empresariales entre $ 10 millones y $ 100 millones. A partir de 2023, la cartera se dirigió a aproximadamente 47 compañías de mercado medio inferior en varios sectores.

Característica de segmento	Datos específicos
Rango de valor de la empresa promedio	$ 10M - $ 100M
Número de compañías de cartera	47 empresas
Tamaño de inversión típico	$ 5M - $ 25M por empresa

Empresas privadas que buscan capital de crecimiento

Capital Southwest proporciona capital estratégico a las empresas privadas con un fuerte potencial de crecimiento.

• Inversión Centrarse en empresas con modelos comerciales probados
• Rango de ingresos anual típico: $ 10M - $ 100M
• Preferencia por las empresas con EBITDA entre $ 3M - $ 15M

Empresas en transición o reestructuración

A partir de 2023, la corporación apoyó aproximadamente 12-15 empresas sometidas a transiciones estratégicas.

Tipo de transición	Número de empresas
Transiciones de gestión	5-7 empresas
Reestructuración de propiedad	4-6 empresas
Reposicionamiento estratégico	3-4 empresas

Diversos sectores de la industria

Capital Southwest mantiene una cartera diversificada en múltiples sectores.

Sector industrial	Porcentaje de cartera
Tecnología	28%
Cuidado de la salud	22%
Servicios industriales	18%
Servicios comerciales	15%
Productos de consumo	12%
Otros sectores	5%

Empresas emprendedoras

Capital Southwest se dirige específicamente a empresas emprendidas empresariales con fuertes equipos de gestión.

• Aproximadamente el 65% de las compañías de cartera están dirigidas por fundadores
• Experiencia del equipo de gestión promedio: 15-20 años
• Preferencia por las empresas con estrategias de crecimiento escalables

Capital Southwest Corporation (CSWC) - Modelo de negocio: Estructura de costos

Salarios de gestión de inversiones

A partir del año fiscal 2023, Capital Southwest Corporation reportó gastos de compensación total de $ 8.4 millones para el personal de gestión clave.

Posición	Salario anual promedio
Director ejecutivo	$1,250,000
Director financiero	$750,000
Administradores de inversiones	$450,000 - $650,000

Gastos de monitoreo de cartera

Los costos anuales de monitoreo y gestión de la cartera para capital suroeste totalizaron aproximadamente $ 3.2 millones en 2023.

• Infraestructura tecnológica para el seguimiento de la cartera: $ 1.1 millones
• Servicios de análisis de cartera externos: $ 750,000
• Sistemas de monitoreo interno: $ 1.35 millones

Costos de cumplimiento regulatorio

Los gastos de cumplimiento regulatorio para Capital Southwest ascendieron a $ 2.6 millones en el año fiscal 2023.

Categoría de cumplimiento	Gasto anual
Cumplimiento legal	$1,050,000
Informes de la SEC	$650,000
Auditoría interna	$900,000

Tarifas de servicio profesional

Las tarifas de servicio profesional para Capital Southwest fueron de $ 4.5 millones en 2023.

• Servicios de contabilidad externos: $ 1.2 millones
• Servicios de asesoramiento legal: $ 1.8 millones
• Consultoría de inversiones: $ 1.5 millones

Gastos de marketing y desarrollo empresarial

Los gastos de marketing y desarrollo comercial totalizaron $ 1.7 millones para el año fiscal 2023.

Canal de marketing	Gasto anual
Marketing digital	$550,000
Relaciones con inversores	$750,000
Participación de la conferencia y eventos	$400,000

Capital Southwest Corporation (CSWC) - Modelo de negocios: flujos de ingresos

Ingresos por intereses de las inversiones de deuda

A partir del tercer trimestre de 2023, Capital Southwest informó $ 18.6 millones en ingresos por intereses de su cartera de inversión de deuda.

Tipo de inversión	Ingresos de intereses ($ M)	Porcentaje de total
Primera deuda de gravamen	12.4	66.7%
Deuda de segundo gravamen	4.2	22.6%
Deuda de entrepiso	2.0	10.7%

Ingresos de dividendos de inversiones de capital

Para el año fiscal 2023, CSWC generó $ 9.3 millones en ingresos por dividendos de sus inversiones de capital.

Apreciación de capital de las inversiones de cartera

En 2023, Capital Southwest informó $ 22.7 millones en apreciación de capital no realizada en su cartera de inversiones.

Ganancias realizadas por salidas de inversión

Para el año fiscal 2023, CSWC registró $ 15.4 millones en ganancias realizadas de salidas completas o parciales de inversiones de cartera.

Tipo de salida	Ganancias realizadas ($ m)	Número de salidas
Venta completa de la empresa	8.6	3
Salida parcial	6.8	5

Tarifas de los servicios de gestión de inversiones

CSWC generado $ 3.2 millones en tarifas de gestión y asesoramiento Durante el año fiscal 2023.

• Tarifas de gestión base: $ 2.1 millones
• Tarifas basadas en el desempeño: $ 1.1 millones

Capital Southwest Corporation (CSWC) - Canvas Business Model: Value Propositions

You're looking at how Capital Southwest Corporation delivers value to its customers and shareholders, and honestly, it boils down to security and yield in the lower middle market (LMM). The core proposition is offering customized, flexible debt and equity financing solutions. They aren't just handing out cookie-cutter loans; they structure deals to support the acquisition and growth of middle-market businesses, often targeting LMM companies that typically have annual EBITDA between $3.0 million.

The defensive nature of the portfolio is a huge part of the value proposition. Capital Southwest Corporation prioritizes safety, which you see clearly in the structure. As of the second fiscal quarter of 2026, a massive 99% of the credit portfolio was in First Lien Senior Secured Debt. This focus on the most secure part of the capital structure helps keep risk managed while still generating attractive returns. For instance, the Weighted Average Yield on debt investments for Q2 FY26 hit 11.5%.

Shareholders definitely see this reflected in the payout structure. Capital Southwest Corporation is committed to attractive shareholder returns through a combination of regular and supplemental dividends. For the quarter ending December 31, 2025, the Board declared monthly regular dividends of $0.1934 per share for October, November, and December, plus a quarterly supplemental dividend of $0.06 per share payable in December 2025. That made for a total dividend of $0.64 per share for that quarter. On an annualized basis, the company has an annual dividend of $2.55 per share, translating to a yield of 11.66%. The management team backs this up; for the LTM period ending Q2 FY26, the regular dividend coverage was at 104% of Pre-Tax NII, and the Estimated Undistributed Taxable Income (UTI) stood at $1.13 per share as of September 30, 2025.

The access to capital for the LMM segment is a key differentiator. Capital Southwest Corporation focuses on these smaller, growing businesses. You saw this in their origination activity; deal flow in the lower middle market was robust, leading to $245 million in total new commitments during Q2 FY26. This deployment, which was heavily weighted toward senior debt, shows they are actively providing the growth capital needed in this underserved space.

Here's a quick look at how those key metrics stack up from the latest reported quarter:

Metric	Value	Context/Period
Weighted Average Yield on Debt Investments	11.5%	Q2 FY26
First Lien Senior Secured Debt	99%	% of Credit Portfolio
Total New Committed Credit Investments	$241.5 million	Q2 FY26
Regular Dividend per Share (Dec '25 Quarter)	$0.1934	Monthly Regular
Supplemental Dividend per Share (Dec '25)	$0.06	Quarterly Supplemental
Non-Accruals (Fair Value)	1.0%	% of Total Investment Portfolio

The company also offers equity co-investments alongside its debt, with an equity portfolio valued at $171.7 million as of September 30, 2025. This ability to participate across the capital structure, while maintaining that high percentage of first lien debt, is what defines their value proposition to borrowers and investors alike. The portfolio is spread across 110 companies as of September 30, 2025, with an average investment hold size of only 0.9% of the portfolio, showing defintely good granularity.

Finance: draft the Q3 FY26 projections for UTI coverage by next Tuesday.

Capital Southwest Corporation (CSWC) - Canvas Business Model: Customer Relationships

The Customer Relationships for Capital Southwest Corporation center on deep, sustained engagement with its portfolio companies and transparent communication with its capital providers, both public equity holders and debt investors.

Direct, high-touch engagement with portfolio company management.

Capital Southwest Corporation operates as an internally managed Business Development Company (BDC), which inherently suggests a hands-on approach to managing its investments. The firm focuses on the middle market, typically providing financing solutions to businesses with annual earnings between $3 million and $25 million. This segment often requires more direct partnership than larger corporate lending. The relationship is built on providing flexible financing solutions to support acquisition and growth. As of the quarter ended September 30, 2025, the total investment portfolio stood at fair value of approximately $1.9 billion, spread across 126 companies. This level of concentration across a defined number of borrowers necessitates close monitoring and direct interaction with management teams.

The nature of the relationship is heavily weighted toward senior secured debt, which aligns the interests of Capital Southwest Corporation with the stability of the underlying business. As of September 30, 2025, 99% of the credit portfolio was structured as 1st Lien Senior Secured Debt. The firm typically invests between $5 million and $25 million per transaction across the capital structure, including first lien, second lien, and non-control equity co-investments.

Here are key statistics reflecting the portfolio structure that underpins these relationships as of late 2025:

Metric	Value as of September 30, 2025
Total Investment Portfolio (Fair Value)	$1.9 billion
Number of Portfolio Companies	126
Credit Portfolio Percentage in 1st Lien Debt	99%
Weighted Average Yield on Debt Investments	11.5%
Loans on Non-Accrual (as % of Fair Value)	1.0%

Long-term, partnership-focused approach to financing.

The emphasis on first lien debt, combined with equity co-investments, signals a commitment to the long-term success of the portfolio company rather than just a transactional lending model. The firm has a history of successful exits, achieving a cumulative weighted average IRR of 13.0% on 105 portfolio company exits since the launch of its credit strategy in January 2015. This history of successful partnership realization reinforces the long-term focus.

Investor relations for public shareholders and debt investors.

Managing relationships with capital providers is critical for a publicly traded BDC. Capital Southwest Corporation maintains a consistent dividend policy, supported by strong income generation. For the quarter ending December 31, 2025, the Board declared regular monthly dividends of $0.1934 per share for October, November, and December 2025, plus a supplemental dividend of $0.06 per share for December 2025. The total dividend declared for that December quarter was $0.64 per share. The company reported a Last Twelve Months (LTM) Pre-Tax Net Investment Income Regular Dividend Coverage of 104% as of September 30, 2025, showing the regular payout is well covered by recurring earnings. The Net Asset Value (NAV) per share stood at $16.62 as of September 30, 2025.

For debt investors, Capital Southwest Corporation actively manages its capital structure. For example, in September 2025, the company successfully raised $350 million in 5.950% notes due 2030. Furthermore, the Corporate Credit Facility was increased to total commitments of $510 million in April 2025. You should note that the company also utilizes an at-the-market (ATM) equity program to raise capital opportunistically, selling shares at a premium to NAV to fund growth.

Consistent follow-on financings for performing companies.

A key indicator of a strong relationship is the willingness and ability to provide additional capital to existing, performing portfolio companies. This is a deliberate part of the strategy, often coming in the form of add-on commitments to fund bolt-on acquisitions or organic growth initiatives for established partners. During the quarter ended September 30, 2025, Capital Southwest Corporation provided add-on commitments totaling $79.7 million to ten portfolio companies. This was part of total new committed investments of $245.5 million for that quarter. This consistent provision of follow-on capital demonstrates the partnership approach in action.

• New portfolio company originations during the quarter ended September 30, 2025, totaled $165.8 million across seven new companies.
• The total new committed credit investments for the quarter ended September 30, 2025, amounted to $241.5 million.
• The company has the ability to increase its Corporate Credit Facility up to a maximum of $750 million via its accordion feature.

The relationship strategy is clearly about being a reliable, long-term capital partner to the middle market, which is reflected in the high percentage of first lien debt and the consistent deployment of follow-on capital.

Capital Southwest Corporation (CSWC) - Canvas Business Model: Channels

You're looking at how Capital Southwest Corporation (CSWC) gets its deals done and raises the money to fund them as of late 2025. It's a mix of direct hustle and established market access.

Direct origination team for sourcing proprietary deals.

The internal team drives deal flow directly. For the quarter ended September 30, 2025, Capital Southwest Corporation originated $245.5 million in new commitments. This activity was spread across seven new portfolio companies, which accounted for $165.8 million of the new commitments, and add-on commitments to ten existing portfolio companies, totaling $79.7 million. The new company originations included $162.5 million in first lien senior secured debt and $3.3 million in equity investments. Management indicated that the origination volume for the quarter ending December 31, 2025, is expected to look similar to this level. Follow-on financings represented approximately 32% of the total capital commitments for the quarter.

Network of private equity firms and investment banks.

A core part of the sourcing strategy involves partnering with private equity groups. This network provides a steady stream of sponsored deals. As of an earlier report, approximately 93% of Capital Southwest Corporation's credit portfolio was backed by private equity firms, showing a heavy reliance on this channel for deal flow and portfolio company guidance.

Public equity market (NASDAQ: CSWC) for common stock.

Capital Southwest Corporation uses the public market to bring in equity capital, often when the stock trades at a premium to its Net Asset Value (NAV). During the quarter ended September 30, 2025, the company raised approximately $40 million through its Equity ATM Program. The weighted average share price for this issuance was $22.81 per share. The Net Asset Value (NAV) per share for Capital Southwest Corporation as of September 30, 2025, stood at $16.62 per share. The reported Market Capitalization around that time was $1.13 billion.

Debt capital markets for unsecured notes and credit facilities.

The company actively taps the unsecured bond market to secure long-term, cost-effective funding. In the quarter ending September 30, 2025, Capital Southwest Corporation successfully raised $350 million in its inaugural index-eligible unsecured bond transaction with a coupon of 5.950% (Notes due 2030). Proceeds from this issuance were used to redeem older debt, specifically $150 million of the 3.375% Notes due October 2026 and $71.9 million of the 7.75% Notes due August 2028, with no make-whole premium due. Furthermore, the Small Business Administration (SBA) provided an initial leverage commitment to SBIC II of $40 million. At the end of the quarter, Capital Southwest Corporation had approximately $719 million in cash and undrawn leverage commitments available across its facilities.

Here's a quick look at the debt structure activity around the September 30, 2025, reporting date:

Debt Instrument/Facility	Outstanding Amount (as of 9/30/2025 or related action)
New Unsecured Notes Issued (5.950% due 2030)	$350 million raised
3.375% Notes due October 2026 (Net Debt Outstanding)	$149.2 million (partially redeemed)
7.75% Notes due August 2028 (Net Debt Outstanding)	Amount redeemed was $71.9 million
SPV Credit Facility (Total Debt Outstanding)	$77.0 million
Total Unused Leverage Capacity	Approximately $719 million (Cash and undrawn commitments)

The regulatory debt to equity ratio at the end of the quarter was 0.91 to 1.

Capital Southwest Corporation (CSWC) - Canvas Business Model: Customer Segments

You're looking at the core of Capital Southwest Corporation's business-who they lend money to and invest in as of late 2025. Honestly, it's all about the middle market, but they have a clear focus within that space.

Capital Southwest Corporation (CSWC) specializes in providing flexible financing solutions to support the acquisition and growth of middle market businesses, primarily located in the United States. The primary customer segments are:

• US-based lower middle market (LMM) companies.
• Upper-middle market (UMM) companies for debt capital.

As of the quarter ended September 30, 2025, the total investment portfolio stood at $1.9 billion, with the credit portfolio specifically at $1.7 billion. This portfolio was spread across 125 lower and upper-middle-market companies.

The portfolio is definitely diversified. Capital Southwest Corporation (CSWC) is exposed to over 20 industries. They typically invest between $5 million and $25 million per transaction across these diverse sectors.

Industry Segment	Percentage of Total Holdings (Approximate)
Healthcare Services	13%
Media & Marketing	8%
Food/Agriculture & Beverage	7%

A significant portion of the customer base involves companies backed by private equity sponsors. Capital Southwest Corporation (CSWC) often partners with private equity firms to support investments. For LMM deals, they frequently invest on a minority basis in the equity alongside the sponsor. As of the second quarter of fiscal year 2025 remarks, the equity co-investment portfolio included 72 investments with a total fair value of $134 million. When making equity co-investments alongside debt, the allocation is up to 20 percent of the total check size.

The firm maintains a conservative approach by avoiding certain segments. Specifically, Capital Southwest Corporation (CSWC) avoids investing in startups, publicly traded companies, real estate developments, project finance opportunities, oil and gas exploration businesses, or struggling businesses.

Capital Southwest Corporation (CSWC) - Canvas Business Model: Cost Structure

The Cost Structure for Capital Southwest Corporation is heavily influenced by the cost of its debt financing, which is necessary to fund its investment portfolio, along with standard operational overheads.

Interest expense on borrowings represents a significant component of the cost structure. For the second fiscal quarter ended September 30, 2025 (Q2 FY26), Capital Southwest Corporation reported an interest expense totaling $16.0 million. This was an increase from the prior quarter, primarily due to an increase in average borrowings.

Operating expenses, which exclude interest expense, are managed tightly, reflecting the internally managed structure of Capital Southwest Corporation. For Q2 FY26, total operating expenses were $6.9 million. This figure was lower than the prior quarter's $8.0 million. These costs include the compensation for employees and general and administrative (G&A) costs.

The components of these operating expenses for the quarter ended September 30, 2025, included:

• Total operating expenses (excluding interest expense): $6.9 million.
• The decrease from the prior quarter was primarily due to a decrease in total employee compensation related to accrued bonus compensation.

Costs associated with raising capital are an inherent part of the business model, though specific fee amounts for Q2 FY26 are not explicitly itemized separately from general operating expenses. Capital Southwest Corporation actively manages its capital structure, which involves the costs of issuing new debt and equity. For instance, during the quarter ended September 30, 2025, the company issued $350 million of 5.95% notes due 2030. Costs related to equity issuance, such as underwriting fees for the Equity ATM Program, are factored into the overall cost of capital.

The impact of market fluctuations on the investment portfolio is reflected through net realized and unrealized depreciation on investments. For Q2 FY26, this amounted to a net loss of $6.4 million, which represented 0.3% of total investments at fair value.

Here is the breakdown of the net realized and unrealized losses on investments for the quarter ended September 30, 2025:

Cost Component	Amount (USD Millions)
Total Net Realized and Unrealized Losses on Investments	$6.4 million
Net Realized and Unrealized Losses on Debt Investments	$10.3 million
Net Realized and Unrealized Gains on Equity Investments	$5.7 million
Net Realized and Unrealized Income Tax Provision	$1.8 million

The net realized and unrealized losses on investments of $6.4 million were the result of net realized and unrealized losses on debt investments of $10.3 million, which was partially offset by net realized and unrealized gains on equity investments of $5.7 million, plus a net realized and unrealized income tax provision of $1.8 million. You see, the debt side is where the mark-to-market hits hardest when the market shifts.

Capital Southwest Corporation (CSWC) - Canvas Business Model: Revenue Streams

You're looking at how Capital Southwest Corporation (CSWC) actually brings in the money to pay those attractive distributions. For a Business Development Company (BDC) like CSWC, the revenue streams are pretty straightforward, centered on the assets they hold in the middle market.

The interest income from debt investments is definitely the engine here. This is the bread and butter, coming from the loans they make to middle-market companies. As of the quarter ended September 30, 2025, the portfolio carried a Weighted Average Yield on Debt Investments of 11.5%. That yield is what drives the bulk of the recurring revenue.

Also feeding the top line is fee income. This comes from a couple of places: fees collected when a borrower prepays a loan early, and arrangement or origination fees charged when a new loan is put in place. For the quarter ended September 30, 2025, stronger fee income was explicitly mentioned as a reason why total investment income beat expectations.

You can see the scale of the income generation in the most recent reported period. The Total Investment Income for the quarter ended September 30, 2025, was $56.9 million. This figure is the sum of interest, fees, and other recurring items, and it was up sequentially from $55.9 million in the prior quarter.

The upside potential, which isn't always steady, comes from equity positions. This includes dividend and distribution income from equity holdings, which is separate from the interest income on the debt side. Furthermore, Capital Southwest Corporation (CSWC) actively harvests profits from its minority equity co-investments. For the second fiscal quarter of 2026 (the quarter ended September 30, 2025), the company successfully realized gains from the exit of one equity investment, booking $3.5 million in net realized gains. This gain was a key driver in increasing the Estimated Undistributed Taxable Income (UTI) balance to $1.13 per share as of that date.

Here's a quick look at the components that make up the total income picture for that period, focusing on the drivers and the specific gain mentioned:

Revenue Component	Financial Metric/Amount	Period/Context
Total Investment Income	$56.9 million	Quarter ended September 30, 2025
Weighted Average Yield on Debt Investments	11.5%	As of September 30, 2025
Realized Gains from Equity Exit	$3.5 million	Quarter ended September 30, 2025 (Q2 FY26)
Estimated Undistributed Taxable Income (UTI)	$1.13 per share	As of September 30, 2025

To be fair, the recurring income from the debt portfolio is what you watch most closely for dividend sustainability. The equity gains are nice, but they aren't guaranteed every quarter. The total distribution declared for that December 2025 payment period reflected this mix:

• Regular Monthly Dividend: $0.1934 per share (for October, November, and December 2025).
• Supplemental Dividend: $0.06 per share (paid in December 2025).
• Total Declared Dividend for the December Quarter: $0.6402 per share.

Finance: draft next quarter's NII projection based on current weighted average yield and origination pipeline volume by Friday.