Capital Southwest Corporation (CSWC): Modelo de Negócios Canvas [Jan-2025 Atualizado]

A Capital Southwest Corporation (CSWC) representa uma potência dinâmica de investimento que transforma paisagens comerciais do mercado médio por meio de estratégias financeiras inovadoras. Ao oferecer soluções de capital flexíveis e abordagens de investimento de pacientes, esta empresa de desenvolvimento de negócios navega no terreno complexo de mercado com precisão, apoiando empreendimentos empresariais em diversas indústrias. Seu modelo de negócios exclusivo combina a implantação estratégica de capital, a profunda experiência no setor e um compromisso com a parceria de longo prazo que os diferencia no ecossistema competitivo de investimentos.

Capital Southwest Corporation (CSWC) - Modelo de negócios: Parcerias -chave

Empresas de capital de private equity e risco

A Capital Southwest Corporation mantém parcerias estratégicas com as seguintes empresas de capital de private equity e risco:

Empresa parceira	Foco de investimento	Tipo de colaboração
Kayne Anderson Capital Advisors	Investimentos de mercado intermediário	Oportunidades de co-investimento
PCCP, LLC	Investimentos imobiliários	SIDAÇÃO DE CAPITAL
Hamilton Lane	Investimentos de mercado privado	Consultoria estratégica

Bancos de investimento e consultores financeiros

A Capital Southwest colabora com instituições financeiras especializadas:

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

Empresas de portfólio em vários setores

O portfólio da Capital Southwest inclui investimentos em diversos setores:

Indústria	Número de empresas de portfólio	Valor total de investimento
Tecnologia	12	US $ 156,4 milhões
Assistência médica	8	US $ 94,2 milhões
Serviços industriais	6	US $ 87,6 milhões
Produtos de consumo	5	US $ 63,1 milhões

Redes de investimentos para pequenas empresas

A Capital Southwest participa das seguintes redes de investimento:

• Programa de Small Business Investment Company (SBIC)
• Associação Nacional de Empresas de Investimento em Pequenas Empresas (NASBIC)
• Texas Venture Capital Association
• Conselho de Investimento Americano

Estatísticas -chave da parceria:

• Investimentos totais de parceria: US $ 401,3 milhões
• Duração média da parceria: 5,7 anos
• Parcerias de investimento ativo: 31
• Cobertura geográfica: 18 estados

Capital Southwest Corporation (CSWC) - Modelo de negócios: Atividades -chave

Fornecendo dívida de longo prazo e capital patrimonial

A partir do quarto trimestre de 2023, a Capital Southwest Corporation possui um portfólio total de investimentos de US $ 462,1 milhões. O portfólio consiste em:

Tipo de investimento	Valor total	Percentagem
Investimentos em dívida	US $ 352,6 milhões	76.3%
Investimentos em ações	US $ 109,5 milhões	23.7%

Gerenciando portfólio de investimentos

O gerenciamento de portfólio envolve a supervisão estratégica dos investimentos em vários setores:

• Número de empresas de portfólio: 45
• Tamanho médio do investimento: US $ 10,3 milhões
• Rendimento médio ponderado em investimentos em dívida: 12,4%

Identificando e avaliando possíveis oportunidades de investimento

O processo de triagem de investimentos inclui:

Critérios de triagem	Métricas
Receita anual de empresas -alvo	US $ 10 milhões - US $ 100 milhões
Faixa de Ebitda	US $ 3 milhões - US $ 20 milhões
Indústrias de foco	Serviços de negócios, saúde, industrial

Fornecendo orientação estratégica para empresas de portfólio

Métricas de suporte estratégico:

• Assentos da placa realizados: 22
• Funções de consultoria ativa: 18 empresas
• Horário de suporte operacional: aproximadamente 1.200 anualmente

Mantendo a conformidade regulatória como uma empresa de desenvolvimento de negócios (BDC)

Métricas de conformidade:

Requisito regulatório	Status de conformidade
Taxa de cobertura de ativos	276% (mínimo necessário: 200%)
Distribuições aos acionistas	90% da renda tributável
Registros trimestrais da SEC	100% de envio pontual

Capital Southwest Corporation (CSWC) - Modelo de negócios: Recursos -chave

Equipe experiente de gerenciamento de investimentos

Em 31 de dezembro de 2023, a equipe de gerenciamento de investimentos da Capital Southwest Corporation é compreendida:

Posição	Número de profissionais
Profissionais de investimento seniores	8
Membros da equipe de investimento total	15

Capital financeiro substancial

Recursos Financeiros a partir do quarto trimestre 2023:

Métrica financeira	Quantia
Total de ativos	US $ 1,2 bilhão
Portfólio total de investimentos	US $ 943,5 milhões
Valor líquido do ativo	US $ 715,2 milhões

Extensas redes e relacionamentos do setor

Composição da rede da indústria:

• Empresas de portfólio ativo: 27
• Setores cobertos: saúde, tecnologia, serviços industriais
• Alcance geográfico: principalmente os Estados Unidos

Processos de avaliação de investimento proprietários

Métricas de triagem de investimentos:

• Avaliações de negócios anuais: Aproximadamente 300-400 investimentos em potencial
• Processo de due diligence: Análise abrangente de vários estágios
• Critérios de investimento As áreas de foco:
  • Potencial de crescimento da receita
  • Qualidade da equipe de gerenciamento
  • Posicionamento de mercado

Estratégia de investimento flexível em vários setores

Diversificação do portfólio de investimentos:

Setor	Porcentagem de portfólio
Assistência médica	35%
Tecnologia	25%
Serviços industriais	20%
Outros setores	20%

Capital Southwest Corporation (CSWC) - Modelo de negócios: proposições de valor

Soluções de capital flexíveis para empresas de mercado intermediário

A partir do quarto trimestre de 2023, a Capital Southwest Corporation forneceu capital de investimento, totalizando US $ 454,2 milhões em 38 empresas de portfólio. O tamanho médio do investimento varia entre US $ 10 milhões e US $ 30 milhões por empresa do mercado intermediário.

Categoria de investimento	Montante total	Número de empresas
Investimento total de portfólio	US $ 454,2 milhões	38 empresas
Tamanho médio de investimento	US $ 10 a US $ 30 milhões	Por empresa

Abordagem de parceria estratégica de longo prazo

A Capital Southwest mantém um período médio de participação no investimento de 7 a 10 anos, demonstrando compromisso com parcerias estratégicas de longo prazo.

• Duração típica do investimento: 7-10 anos
• Participação ativa do conselho em empresas de portfólio
• Orientação estratégica prática

Experiência em apoio ao crescimento e reestruturação

Em 2023, a corporação apoiou empresas de portfólio com US $ 67,3 milhões em capital de crescimento e investimentos em reestruturação.

Categoria de suporte	Valor do investimento
Capital de crescimento	US $ 42,1 milhões
Investimentos de reestruturação	US $ 25,2 milhões

Capital do paciente com interferência operacional mínima

Capital Southwest fornece capital do paciente com uma intervenção operacional direta mínima, mantendo uma abordagem de investimento não controlador.

• Normalmente Participação de Equidade Minoritária: 20-40%
• Estrutura de investimento não controlador
• Preservação de autonomia da equipe de gerenciamento

Estruturas de financiamento personalizadas para diversas necessidades de negócios

A corporação oferece vários instrumentos de financiamento adaptados a requisitos de negócios específicos.

Instrumento de financiamento	Alocação total em 2023
Dívida subordinada	US $ 178,6 milhões
Investimentos em ações	US $ 275,6 milhões

Capital Southwest Corporation (CSWC) - Modelo de Negócios: Relacionamentos do Cliente

Engajamento da empresa de portfólio ativo

A Capital Southwest Corporation mantém o envolvimento direto com 18 empresas de portfólio ativo a partir do terceiro trimestre de 2023. O tamanho médio do investimento por portfólio é de US $ 23,4 milhões.

Métrica de engajamento	Valor
Total de empresas de portfólio ativo	18
Investimento médio por empresa	US $ 23,4 milhões
Frequência de interação trimestral	4-6 reuniões estratégicas

Abordagem de investimento consultivo

A Capital Southwest fornece consulta estratégica em vários setores de investimento.

• Consulta do setor de tecnologia: 35% do portfólio
• Aviso de investimento em saúde: 25% do portfólio
• Orientação estratégica de fabricação: 20% do portfólio
• Suporte da indústria de serviços: 20% do portfólio

Serviços de consultoria estratégica em andamento

A corporação fornece Serviços de consultoria estratégica abrangente com um valor consultivo médio anual de US $ 1,2 milhão por portfólio.

Tipo de serviço de consultoria	Valor anual
Planejamento estratégico	$450,000
Reestruturação financeira	$350,000
Otimização operacional	$400,000

Gerenciamento de relacionamento orientado ao desempenho

A Capital Southwest rastreia as métricas de desempenho com protocolos de medição precisos.

• Portfolio Company Receita de rastreamento de crescimento
• Ciclos trimestrais de revisão de desempenho
• Estratégias de melhoria de desempenho personalizadas

Comunicação transparente e relatórios

A frequência e os detalhes dos relatórios são críticos para a estratégia de relacionamento com o cliente da CSWC.

Relatando característica	Freqüência
Relatórios financeiros trimestrais	4 vezes anualmente
Atualizações do painel de desempenho	Mensal
Revisão abrangente anual	1 tempo por ano

Capital Southwest Corporation (CSWC) - Modelo de Negócios: Canais

Interações da equipe de investimento direto

A Capital Southwest Corporation mantém 7 profissionais de investimento dedicados que se envolvem diretamente com empresas de portfólio e possíveis metas de investimento.

Tipo de canal	Número de profissionais	Interações anuais médias
Equipe de investimento direto	7	124 Reuniões da empresa de portfólio

Redes de consultoria financeira

A Companhia aproveita 43 parcerias de consultoria financeira estratégica em vários setores.

• Conexões bancárias de investimento: 18
• Parceiros de rede de private equity: 12
• Redes de referência de capital de risco: 13

Conferências e eventos do setor

A Capital Southwest participa de 22 conferências alvo do setor anualmente.

Tipo de conferência	Participação anual	Interações potenciais de acordo
Conferências de investimento do mercado médio	12	87 Interações potenciais de negócios
Conferências de empreendimento de tecnologia	6	42 Interações potenciais de negócios
Fóruns de investimento em saúde	4	29 Interações potenciais de acordo

Plataformas de relações com investidores online

A Capital Southwest mantém o engajamento digital em três plataformas on -line primárias.

• Site de Relações com Investidores
• Plataforma de arquivamento digital da SEC Edgar
• Canal trimestral de webcast

Redes de referência profissional

A corporação mantém relacionamentos com 62 fontes de referência profissional em vários ecossistemas de investimento.

Categoria de rede de referência	Número de conexões	Volume anual de referência
Empresas jurídicas	19	37 referências em potencial
Empresas de contabilidade	16	29 referências potenciais de negócios
Consultores de investimento	27	46 referências em potencial

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

Empresas de mercado médio inferior

A Capital Southwest se concentra em empresas com valores corporativos entre US $ 10 milhões e US $ 100 milhões. Em 2023, o portfólio direcionou aproximadamente 47 empresas de mercado médio inferior em vários setores.

Característica do segmento	Dados específicos
Intervalo de valor corporativo médio	US $ 10 milhões - US $ 100 milhões
Número de empresas de portfólio	47 empresas
Tamanho típico de investimento	US $ 5 milhões - US $ 25 milhões por empresa

Empresas privadas que buscam capital de crescimento

A Capital Southwest fornece capital estratégico para empresas privadas com forte potencial de crescimento.

• Investimento foco em empresas com modelos de negócios comprovados
• Receita anual típica: US $ 10 milhões - US $ 100 milhões
• Preferência por empresas com EBITDA entre US $ 3 milhões - US $ 15 milhões

Empresas em transição ou reestruturação

A partir de 2023, a corporação apoiou aproximadamente 12 a 15 empresas submetidas a transições estratégicas.

Tipo de transição	Número de empresas
Transições de gerenciamento	5-7 empresas
Reestruturação de propriedade	4-6 empresas
Reposicionamento estratégico	3-4 empresas

Diversos setores da indústria

A Capital Southwest mantém um portfólio diversificado em vários setores.

Setor da indústria	Porcentagem de portfólio
Tecnologia	28%
Assistência médica	22%
Serviços industriais	18%
Serviços de negócios	15%
Produtos de consumo	12%
Outros setores	5%

Negócios liderados por empreendedores

A Capital Southwest tem como alvo especificamente empresas orientadas para empreendedores com fortes equipes de gerenciamento.

• Aproximadamente 65% das empresas de portfólio são fundidas
• Experiência média da equipe de gerenciamento: 15 a 20 anos
• Preferência por empresas com estratégias de crescimento escalável

Capital Southwest Corporation (CSWC) - Modelo de negócios: estrutura de custos

Salários de gerenciamento de investimentos

No ano fiscal de 2023, a Capital Southwest Corporation registrou despesas totais de remuneração de US $ 8,4 milhões para o pessoal de gerenciamento -chave.

Posição	Salário médio anual
Diretor executivo	$1,250,000
Diretor financeiro	$750,000
Gerentes de investimento	$450,000 - $650,000

Despesas de monitoramento de portfólio

Os custos anuais de monitoramento e gerenciamento de portfólio para a Capital Southwest totalizaram aproximadamente US $ 3,2 milhões em 2023.

• Infraestrutura de tecnologia para rastreamento de portfólio: US $ 1,1 milhão
• Serviços de análise de portfólio externo: US $ 750.000
• Sistemas de monitoramento interno: US $ 1,35 milhão

Custos de conformidade regulatória

As despesas de conformidade regulatória para a Capital Southwest totalizaram US $ 2,6 milhões no ano fiscal de 2023.

Categoria de conformidade	Despesa anual
Conformidade legal	$1,050,000
Sec Relatórios	$650,000
Auditoria interna	$900,000

Taxas de serviço profissional

As taxas de serviço profissional da Capital Southwest foram de US $ 4,5 milhões em 2023.

• Serviços de contabilidade externa: US $ 1,2 milhão
• Serviços de Consultoria Jurídica: US $ 1,8 milhão
• Consultoria de investimento: US $ 1,5 milhão

Despesas de marketing e desenvolvimento de negócios

As despesas de marketing e desenvolvimento de negócios totalizaram US $ 1,7 milhão para o ano fiscal de 2023.

Canal de marketing	Despesa anual
Marketing digital	$550,000
Relações com investidores	$750,000
Participação de conferência e evento	$400,000

Capital Southwest Corporation (CSWC) - Modelo de negócios: fluxos de receita

Receita de juros de investimentos em dívida

A partir do terceiro trimestre de 2023, a Capital Southwest relatou US $ 18,6 milhões em receita de juros de seu portfólio de investimentos em dívida.

Tipo de investimento	Receita de juros ($ m)	Porcentagem de total
Primeira dívida de garantia	12.4	66.7%
Segunda dívida de garantia	4.2	22.6%
Dívida do mezanino	2.0	10.7%

Renda de dividendos de investimentos em ações

Para o ano fiscal de 2023, gerou a CSWC US $ 9,3 milhões em renda de dividendos de seus investimentos em ações.

Apreciação de capital dos investimentos em portfólio

Em 2023, a Capital Southwest relatou US $ 22,7 milhões em valorização não realizada de capital em seu portfólio de investimentos.

Ganhos realizados com saídas de investimento

Para o ano fiscal de 2023, a CSWC gravou US $ 15,4 milhões em ganhos realizados de saídas completas ou parciais dos investimentos em portfólio.

Tipo de saída	Ganhos realizados ($ m)	Número de saídas
Venda completa da empresa	8.6	3
Saída parcial	6.8	5

Taxas de serviços de gerenciamento de investimentos

CSWC gerado US $ 3,2 milhões em taxas de gestão e consultoria Durante o ano fiscal de 2023.

• Taxas de gerenciamento base: US $ 2,1 milhões
• Taxas baseadas em desempenho: US $ 1,1 milhão

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.