Capital Southwest Corporation (CSWC): Business Model Canvas [Jan-2025 Mis à jour]

Capital Southwest Corporation (CSWC) représente une puissance d'investissement dynamique qui transforme les paysages commerciaux du marché intermédiaire grâce à des stratégies financières innovantes. En offrant des solutions de capital flexibles et des approches d'investissement des patients, cette société de développement commercial navigue sur un terrain de marché complexe avec précision, soutenant les entreprises entrepreneuriales dans diverses industries. Leur modèle commercial unique mélange le déploiement stratégique des capitaux, l'expertise approfondie de l'industrie et un engagement en faveur d'un partenariat à long terme qui les distingue dans l'écosystème d'investissement concurrentiel.

Capital Southwest Corporation (CSWC) - Modèle d'entreprise: partenariats clés

Sociétés de capital-investissement et de capital-risque

Capital Southwest Corporation maintient des partenariats stratégiques avec les sociétés de capital-investissement et de capital-risque suivantes:

Entreprise partenaire	Focus d'investissement	Type de collaboration
Kayne Anderson Capital Advisors	Investissements sur le marché intermédiaire	Opportunités de co-investissement
PCCP, LLC	Investissements immobiliers	Syndication des capitaux
Hamilton Lane	Investissements du marché privé	Avis stratégique

Banques d'investissement et conseillers financiers

Capital Southwest collabore avec des institutions financières spécialisées:

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

Sociétés de portefeuille dans divers industries

Le portefeuille de Capital Southwest comprend des investissements dans divers secteurs:

Industrie	Nombre de sociétés de portefeuille	Valeur d'investissement totale
Technologie	12	156,4 millions de dollars
Soins de santé	8	94,2 millions de dollars
Services industriels	6	87,6 millions de dollars
Produits de consommation	5	63,1 millions de dollars

Réseaux d'investissement des petites entreprises

Capital Southwest participe aux réseaux d'investissement suivants:

• Programme de société d'investissement en petites entreprises (SBIC)
• Association nationale des sociétés d'investissement aux petites entreprises (NASBIC)
• Texas Venture Capital Association
• American Investment Council

Statistiques de partenariat clés:

• Investissements totaux de partenariat: 401,3 millions de dollars
• Durée du partenariat moyen: 5,7 ans
• Partenariats d'investissement actifs: 31
• Couverture géographique: 18 États

Capital Southwest Corporation (CSWC) - Modèle d'entreprise: activités clés

Fournir des dettes à long terme et des capitaux propres

Au quatrième trimestre 2023, Capital Southwest Corporation a un portefeuille d'investissement total de 462,1 millions de dollars. Le portefeuille se compose de:

Type d'investissement	Valeur totale	Pourcentage
Investissements de la dette	352,6 millions de dollars	76.3%
Investissements en actions	109,5 millions de dollars	23.7%

Gestion du portefeuille d'investissement

La gestion du portefeuille implique une surveillance stratégique des investissements dans divers secteurs:

• Nombre de sociétés de portefeuille: 45
• Taille moyenne de l'investissement: 10,3 millions de dollars
• Rendement moyen pondéré sur les investissements de la dette: 12,4%

Identifier et évaluer les opportunités d'investissement potentielles

Le processus de dépistage des investissements comprend:

Critères de dépistage	Métrique
Revenu annuel des sociétés cibles	10 millions de dollars - 100 millions de dollars
Gamme d'ebitda	3 millions de dollars - 20 millions de dollars
Industries de mise au point	Services commerciaux, soins de santé, industriels

Fournir des conseils stratégiques aux sociétés de portefeuille

Métriques de soutien stratégique:

• Sièges du conseil d'administration détenus: 22
• Rôles consultatifs actifs: 18 entreprises
• Heures de soutien opérationnel: environ 1 200 par an

Maintenir la conformité réglementaire en tant que société de développement commercial (BDC)

Mesures de conformité:

Exigence réglementaire	Statut de conformité
Ratio de couverture des actifs	276% (minimum requis: 200%)
Distributions aux actionnaires	90% du revenu imposable
Déposages trimestriels de la SEC	Soumission 100% à temps

Capital Southwest Corporation (CSWC) - Modèle d'entreprise: Ressources clés

Équipe expérimentée de gestion des investissements

Au 31 décembre 2023, l'équipe de gestion des investissements de Capital Southwest Corporation comprenait:

Position	Nombre de professionnels
Professionnels de l'investissement seniors	8
Membres totaux de l'équipe d'investissement	15

Capital financier substantiel

Ressources financières au quatrième trimestre 2023:

Métrique financière	Montant
Actif total	1,2 milliard de dollars
Portefeuille d'investissement total	943,5 millions de dollars
Valeur de l'actif net	715,2 millions de dollars

Réseaux et relations industriels étendus

Composition du réseau de l'industrie:

• Compagnies de portefeuille actifs: 27
• Secteurs couverts: soins de santé, technologie, services industriels
• Reach géographique: principalement les États-Unis

Processus d'évaluation des investissements propriétaires

Métriques de dépistage des investissements:

• Évaluations annuelles de l'accord: Environ 300 à 400 investissements potentiels
• Processus de diligence raisonnable: Analyse complète en plusieurs étapes
• Critères d'investissement Zones de mise au point:
  • Potentiel de croissance des revenus
  • Qualité de l'équipe de gestion
  • Positionnement du marché

Stratégie d'investissement flexible dans plusieurs secteurs

Diversification du portefeuille d'investissement:

Secteur	Pourcentage de portefeuille
Soins de santé	35%
Technologie	25%
Services industriels	20%
Autres secteurs	20%

Capital Southwest Corporation (CSWC) - Modèle d'entreprise: propositions de valeur

Solutions de capital flexibles pour les entreprises du marché intermédiaire

Au quatrième trimestre 2023, Capital Southwest Corporation a fourni des capitaux d'investissement totalisant 454,2 millions de dollars dans 38 sociétés de portefeuille. La taille moyenne des investissements varie entre 10 et 30 millions de dollars par entreprise du marché intermédiaire.

Catégorie d'investissement	Montant total	Nombre d'entreprises
Investissement total du portefeuille	454,2 millions de dollars	38 entreprises
Taille moyenne de l'investissement	10 à 30 millions de dollars	Par entreprise

Approche de partenariat stratégique à long terme

Capital Southwest maintient une période de détention d'investissement moyenne de 7 à 10 ans, démontrant l'engagement dans les partenariats stratégiques à long terme.

• Durée d'investissement typique: 7-10 ans
• Participation active du conseil d'administration aux sociétés de portefeuille
• Conseils stratégiques pratiques

Expertise en matière de croissance et de soutien à la restructuration

En 2023, la société a soutenu les sociétés de portefeuille avec 67,3 millions de dollars en capital de croissance et restructuration des investissements.

Catégorie de support	Montant d'investissement
Capital de croissance	42,1 millions de dollars
Restructuration des investissements	25,2 millions de dollars

Capital du patient avec une ingérence opérationnelle minimale

Capital Southwest fournit au capital des patients avec une intervention opérationnelle directe minimale, maintenir une approche d'investissement sans contrôle.

• Typiquement des actions minoritaires: 20-40%
• Structure d'investissement sans contrôle
• Conservation de l'autonomie de l'équipe de gestion

Structures de financement personnalisées pour divers besoins commerciaux

La société propose plusieurs instruments de financement adaptés à des exigences commerciales spécifiques.

Instrument de financement	Allocation totale en 2023
Dette subordonnée	178,6 millions de dollars
Investissements en actions	275,6 millions de dollars

Capital Southwest Corporation (CSWC) - Modèle d'entreprise: relations avec les clients

Engagement de l'entreprise de portefeuille actif

Capital Southwest Corporation maintient l'engagement direct avec 18 sociétés de portefeuille actifs au T3 2023. La taille moyenne des investissements par société de portefeuille est de 23,4 millions de dollars.

Métrique de l'engagement	Valeur
Compagnies de portefeuille actifs totaux	18
Investissement moyen par entreprise	23,4 millions de dollars
Fréquence d'interaction trimestrielle	4-6 réunions stratégiques

Approche d'investissement consultative

Capital Southwest fournit une consultation stratégique dans plusieurs secteurs d'investissement.

• Consultation du secteur technologique: 35% du portefeuille
• Conseil d'investissement en santé: 25% du portefeuille
• Guide stratégique de fabrication: 20% du portefeuille
• Support de l'industrie des services: 20% du portefeuille

Services de conseil stratégique en cours

La société fournit Services de conseil stratégique complets Avec une valeur consultative annuelle moyenne de 1,2 million de dollars par entreprise de portefeuille.

Type de service consultatif	Valeur annuelle
Planification stratégique	$450,000
Restructuration financière	$350,000
Optimisation opérationnelle	$400,000

Gestion des relations axée sur les performances

Capital Southwest suit les mesures de performance avec des protocoles de mesure précis.

• Suivi de croissance des revenus de la société de portefeuille
• Cycles de revue des performances trimestrielles
• Stratégies d'amélioration des performances personnalisées

Communication transparente et rapport

La fréquence et les détails de la déclaration sont essentiels à la stratégie de relation client de CSWC.

Caractéristique de rapport	Fréquence
Rapports financiers trimestriels	4 fois par an
Mises à jour du tableau de bord des performances	Mensuel
Revue complète annuelle	1 fois par an

Capital Southwest Corporation (CSWC) - Modèle d'entreprise: canaux

Interactions d'équipe d'investissement direct

Capital Southwest Corporation maintient 7 professionnels de l'investissement dédiés qui s'engagent directement avec les sociétés de portefeuille et les objectifs d'investissement potentiels.

Type de canal	Nombre de professionnels	Interactions annuelles moyennes
Équipe d'investissement direct	7	124 réunions de l'entreprise de portefeuille

Réseaux de conseil financier

La société tire parti de 43 partenariats de conseil financier stratégiques dans plusieurs secteurs.

• Connexions de la banque d'investissement: 18
• Partners du réseau de capital-investissement: 12
• Réseaux de référence au capital-risque: 13

Conférences et événements de l'industrie

Capital Southwest participe à 22 conférences ciblées de l'industrie par an.

Type de conférence	Participation annuelle	Interactions potentielles de l'accord
Conférences d'investissement du marché intermédiaire	12	87 Interactions potentielles de l'accord
Conférences de capital-risque	6	42 Interactions potentielles de l'accord
Forums d'investissement en soins de santé	4	29 Interactions potentielles de l'accord

Plateformes de relations avec les investisseurs en ligne

Capital Southwest maintient l'engagement numérique sur 3 plates-formes en ligne primaires.

• Site Web de relations avec les investisseurs
• Plateforme de classement numérique SEC Edgar
• Chaîne de webdifu trimestrielle

Réseaux de référence professionnels

La société entretient des relations avec 62 sources de référence professionnelles dans divers écosystèmes d'investissement.

Catégorie de réseau de référence	Nombre de connexions	Volume de référence annuel
Cabinets juridiques	19	37 références de transactions potentielles
Compagnies comptables	16	29 références potentielles sur les transactions
Consultants en placement	27	46 références potentielles

Capital Southwest Corporation (CSWC) - Modèle d'entreprise: segments de clientèle

Centre des sociétés du marché intermédiaire inférieures

Capital Southwest se concentre sur les entreprises ayant des valeurs d'entreprise entre 10 et 100 millions de dollars. En 2023, le portefeuille a ciblé environ 47 sociétés inférieures du marché intermédiaire dans divers secteurs.

Caractéristique du segment	Données spécifiques
Plage de valeur de l'entreprise moyenne	10 M $ - 100 M $
Nombre de sociétés de portefeuille	47 entreprises
Taille d'investissement typique	5 millions de dollars - 25 millions de dollars par entreprise

Entreprises privées à la recherche de capital de croissance

Capital Southwest fournit des capitaux stratégiques aux entreprises privées un fort potentiel de croissance.

• L'investissement se concentre sur les entreprises avec des modèles commerciaux éprouvés
• Gamme de revenus annuelle typique: 10 M $ - 100 M $
• Préférence pour les entreprises avec l'EBITDA entre 3 M $ - 15 M $

Les entreprises en transition ou en restructuration

En 2023, la société a soutenu environ 12 à 15 entreprises subissant des transitions stratégiques.

Type de transition	Nombre d'entreprises
Transitions de gestion	5-7 entreprises
Restructuration de propriété	4-6 entreprises
Repositionnement stratégique	3-4 entreprises

Secteurs de l'industrie diversifiés

Capital Southwest maintient un portefeuille diversifié dans plusieurs secteurs.

Secteur de l'industrie	Pourcentage de portefeuille
Technologie	28%
Soins de santé	22%
Services industriels	18%
Services aux entreprises	15%
Produits de consommation	12%
Autres secteurs	5%

Entreprises dirigées par l'entrepreneuriat

Capital Southwest cible spécifiquement des entreprises axées sur l'entrepreneurial avec de solides équipes de gestion.

• Environ 65% des sociétés de portefeuille sont dirigées par des fondateurs
• Expérience moyenne de l'équipe de gestion: 15-20 ans
• Préférence pour les entreprises avec des stratégies de croissance évolutives

Capital Southwest Corporation (CSWC) - Modèle d'entreprise: Structure des coûts

Salaires de gestion des investissements

Depuis l'exercice 2023, Capital Southwest Corporation a déclaré des dépenses totales de rémunération de 8,4 millions de dollars pour le personnel de gestion clé.

Position	Salaire annuel moyen
Directeur général	$1,250,000
Directeur financier	$750,000
Gestionnaires de placements	$450,000 - $650,000

Frais de surveillance du portefeuille

Les coûts annuels de surveillance et de gestion du portefeuille pour Capital Southwest ont totalisé environ 3,2 millions de dollars en 2023.

• Infrastructure technologique pour le suivi du portefeuille: 1,1 million de dollars
• Services d'analyse de portefeuille externes: 750 000 $
• Systèmes de surveillance interne: 1,35 million de dollars

Coûts de conformité réglementaire

Les dépenses de conformité réglementaire pour Capital Southwest s'élevaient à 2,6 millions de dollars au cours de l'exercice 2023.

Catégorie de conformité	Dépenses annuelles
Conformité légale	$1,050,000
Reportage SEC	$650,000
Audit interne	$900,000

Frais de service professionnels

Les frais de service professionnels pour Capital Southwest se sont élevés à 4,5 millions de dollars en 2023.

• Services de comptabilité externe: 1,2 million de dollars
• Services de conseil juridique: 1,8 million de dollars
• Conseil en placement: 1,5 million de dollars

Frais de marketing et de développement commercial

Les dépenses de marketing et de développement commercial ont totalisé 1,7 million de dollars pour l'exercice 2023.

Canal de marketing	Dépenses annuelles
Marketing numérique	$550,000
Relations avec les investisseurs	$750,000
Conférence et participation des événements	$400,000

Capital Southwest Corporation (CSWC) - Modèle d'entreprise: Strots de revenus

Revenu des intérêts des investissements de la dette

Au troisième rang 2023, Capital Southwest a rapporté 18,6 millions de dollars de revenus d'intérêts de son portefeuille d'investissement en dette.

Type d'investissement	Revenu des intérêts ($ m)	Pourcentage du total
Dette du premier privilège	12.4	66.7%
Dette du deuxième privilège	4.2	22.6%
Dette de mezzanine	2.0	10.7%

Revenu des dividendes provenant des investissements en actions

Pour l'exercice 2023, CSWC a généré 9,3 millions de dollars de revenus de dividendes à partir de ses investissements en actions.

Appréciation du capital des investissements de portefeuille

En 2023, Capital Southwest a rapporté 22,7 millions de dollars en appréciation du capital non réalisée à travers son portefeuille d'investissement.

Réalisé des gains à partir de sorties d'investissement

Pour l'exercice 2023, CSWC a enregistré 15,4 millions de dollars en gains réalisés à partir des sorties complètes ou partielles des investissements de portefeuille.

Type de sortie	Gains réalisés ($ m)	Nombre de sorties
Vente complète de l'entreprise	8.6	3
Sortie partielle	6.8	5

Frais de services de gestion des investissements

CSWC généré 3,2 millions de dollars de frais de gestion et de conseil Au cours de l'exercice 2023.

• Frais de gestion de la base: 2,1 millions de dollars
• Frais basés sur la performance: 1,1 million de dollars

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.