Form 8-K CAPITAL SOUTHWEST CORP For: Dec 02

�Creating Two Stand-Alone Companies��December 2, 2014�

�Page *��This presentation contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995 relating to, among other things, the manner, tax-free nature and expected benefits associated with the proposed spin-off of certain of CSWCs control assets into a new, independent, publicly traded company (Industrial Co.), the expected timing of the completion of the transaction and the business, financial condition and results of operations of CSWC, including the businesses of Industrial Co. Any statements preceded or followed by or that include the words "believe," "expect," "intend," "plan," "should" or words, phrases or similar expressions or the negative thereof, are intended to identify forward-looking statements. These statements are made on the basis of the current beliefs, expectations and assumptions of the management of CSWC. There are a number of risks and uncertainties that could cause CSWCs actual results to differ materially from the forward-looking statements included in this communication. These risks and uncertainties include, but are not limited to, risks relating to CSWCs ability to obtain all necessary approvals to complete, and to otherwise complete, the proposed spin-off transaction and to achieve the expected benefits therefrom. In light of these risks, uncertainties, assumptions, and other factors inherent in forward-looking statements, actual results may differ materially from those discussed in this communication. Other unknown or unpredictable factors could also have a material adverse effect on CSWCs actual future results, performance, or achievements. For a further discussion of these and other risks and uncertainties applicable to CSWC and its business, see CSWCs Annual Report on Form 10-K for the fiscal year ended March 31, 2014 and subsequent filings with the Securities and Exchange Commission (the SEC). As a result of the foregoing, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this communication. CSWC does not assume any obligation to update these forward-looking statements to reflect any new information, subsequent events or circumstances, or otherwise, except as may be required by law.��Forward-Looking Statements�

�Page *��Transaction Overview��Strategic Rationale��Industrial Co. will be a diversified industrial growth company and convert to a C Corp. which will enhance its financial / strategic flexibilityCSWC will remain an internally-managed business development company (BDC) and focus on lending opportunities to strong middle market companies in the Southwest and across the country; new investment opportunities supported by significant capital base����������Structure��100% spin-off of certain control assets of CSWCTax-free transaction to CSWC shareholdersCSWC shareholders will receive shares of Industrial Co. pro rata for every CSWC share they�own����������Timing��Completion is expected by the end of the 3rd quarter 2015 (subject to certain conditions and approvals, including receipt of an order for exemptive relief from the SEC)Expect to file initial Form 10 in 2nd quarter 2015Investor roadshows organized closer to completion date������Create two publicly-traded companies to unlock shareholder value and increase focus�

�Page *��Organizational Structure��Today��Post Spin-Off��Shareholders��Capital Southwest Venture Corp. (CSVC)(1)��Capital Southwest Management Company (CSMC)��Investments Plus Cash��Certain Control Assets��Nasdaq-Listed��Distributed To CSWC Shareholders��Shareholders��CSVC(1)��CSMC��Remaining InvestmentsPlus Cash�� Nasdaq-Listed��Industrial Co.(Expected to be Listed on Nasdaq/NYSE)��Certain Control Assets��The RectorSeal Corporation (RectorSeal)Jet-Lube, Inc. (Jet-Lube)The Whitmore Manufacturing Company (Whitmore)��100%��100%��100%��(1) Includes small business investment company ("SBIC") license�

�Page *��Industrial Co. and CSWC Snapshot��(1) Expected to be appointed by the Board of Directors����Summary Business Description����Key Shareholder Benefits����������Industrial Co.Headquarters:Dallas, TXCEO:Joe Armes��Pureplay diversified industrial growth companyWellestablished and scalable platformsDeep domain expertise across core industries  industrial products and specialty chemicalsExposure to highgrowth Southwest markets with strong underlying economic trendsProven acquisition expertise  30 acquisitions since 1991����Unlock shareholder value todayProvide greater transparency into financial performance of these attractive businesses and for more appropriate market valuationAllow Industrial Co. to focus on organic growth efforts and continued strategic acquisition opportunitiesAllow for more tax efficient movement of capital across companies to fund highest priority investment opportunitiesConvert to C Corp. establishing permanence of the embedded gain������������������CapitalSouthwestCorporationHeadquarters:Dallas, TXCEO:Bowen Diehl(1)��Continue to operate as an internally-managed BDC, but with a clearly articulated strategy of primarily investing in debt securities in the middle market that will deliver a marketbased dividend to shareholdersSeek limited equity exposure to grow NAV / share over timeOrigination platform development in processFocus on middle market companies in the Southwest and across the U.S. both sponsored and non-sponsored����Create a path to unlock shareholder value over timeConstruct investment portfolio with an attractive riskadjusted yield to support a marketbased dividendDeliver to the market an appropriately sized asset in the BDC asset class���������

�Page *��Industrial Co.s Businesses��Manufactures specialty chemical products and control devices for plumbing, HVAC, electrical and industrial applications��x��Manufactures specialty lubricants and other products used in oil field and industrial applications��x��Manufactures high performance specialty lubricants for heavy equipment used in surface mining, railroads and other industriesManufactures lubrication equipment specifically for rail applications and lubrication-centric reliability solutions for a wide variety of industriesProduces water-based coatings for the automotive and primary metals industries�

�Page *��Industrial Co. shareholders will be invested in a diversified industrial growth company that is expected to generate strong free cash flow while continuing to grow organically and through a strategic acquisition programFour key components of Industrial Co.s vision and growth strategy:Organization of the business lines into industry verticalsSystematic application of best practices across business lines in areas such as strategy development, operating performance and measurement, capital investment optimization and corporate governancePursuit of strategic acquisitions that either build existing industry verticals or provide an entry into new, complementary industry verticals where best practices can enhance performanceEstablish a deep management team with significant relevant expertise��Industrial Co.s Strategy & Vision�

�Page *��CSWC will build an investment portfolio that generates attractive risk-adjusted returns and an investment yield adequate to support a market-based dividend which should allow CSWC to trade at or above net asset value (NAV) over timeCSWC intends to continue the companys long legacy of actively investing in and supporting the acquisition and growth of middle market companies across the Southwest and the U.S.Efforts to expand origination platform currently underwaySpecifically, CSWC intends to invest in:Senior unitranche debtSecond lien and subordinated debtPreferred stock and common stock (alongside debt investments or through warrants in order to help facilitate NAV / share growth over time)Seek to actively support financial sponsors with capital for platform and add-on acquisitions, as well as entrepreneurs and other business owners with capital for growth and acquisitions��CSWCs Strategy & Vision�

�Page *��Leadership Bios��Industrial Co.��Chairman of the Boards  Joe Armes��CSWC��Chief Executive Officer  Joe Armes��Chief Executive Officer  Bowen Diehl(1)��Joined Capital Southwest Corporation in 2013 as Chief Executive Officer and has over 20 years of experience in mergers, acquisitions, capital markets transactions and private equityPreviously served as Chief Operating Officer of Hicks Holdings LLC, where he led the acquisition, management and disposition of a diverse portfolio of private equity investments across a broad range of industriesPreviously, he served as executive vice president and general counsel of Suiza Foods Corporation (now Dean Foods Company (NYSE: DF)) and vice president and general counsel of The Morningstar Group Inc. (NASDAQ: MSTR), and was an attorney at Weil, Gotshal & MangesBBA (Finance) and MBA from Baylor University, and a JD from Southern Methodist University��Joined Capital Southwest Corporation in 2014 as Senior Vice President and Chief Investment Officer to lead the firms investment activitiesAlmost 20 years of experience in the financial services, private equity and mezzanine lending industries at Chase Securities, Merrill Lynch and American CapitalMost recently served as a Managing Director at American Capital, which he joined in 2001, closing debt and equity investments in 15 platform companiesTransactions included investments in debt and equity securities (often both in same deal) representing over $1.1 billion of invested capital in a variety of industriesServed as co-head of the Sponsor Finance GroupBuilt and managed a team that at its peak represented 4 offices and over 15 professionalsBachelor of Engineering degree from Vanderbilt University and a MBA from The University of Texas at Austin��(1) Expected to be appointed by the Board of Directors�

�Page *��Historical Stand-Alone Financial Results��Note: $ in millions; numbers are presented on a stand-alone basis as disclosed in CSWCs most recent 10-KSource: Company filings�

�Page *��This communication contains non-GAAP financial measures. These measures are included to facilitate meaningful comparisons of our results to those in prior periods and future periods and to allow a better evaluation of our operating performance, in managements opinion. Our reference to non-GAAP measures should not be considered as a substitute for results that are presented in a manner consistent with GAAP. These non-GAAP measures are provided only to enhance investors overall understanding of our financial performance.EBITDA is a non-GAAP financial measure. EBITDA is defined as net income before interest expense, income taxes, depreciation and amortization. The following tables reconcile net income to EBITDA for each of RectorSeal, Whitmore and Jet-Lube for the periods set forth in the table on the next page.��Use of Non-GAAP Financial Measures�

�Page *��Use of Non-GAAP Financial Measures (Contd)��Note: $ in millions; numbers are presented on a stand-alone basis as disclosed in CSWCs most recent 10-KSource: Company filings�

�Page *��CSWC intends to file with the SEC a proxy statement in connection with the proposed spin-off transaction. The definitive proxy statement will be sent or given to CSWC shareholders and will contain important information about the proposed transaction and related matters. SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT AND OTHER RELEVANT MATERIALS CAREFULLY WHEN IT BECOMES AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT CSWC AND THE PROPOSED TRANSACTION. The proxy statement and other relevant materials (when they become available), and any other documents filed by CSWC with the SEC, may be obtained free of charge at the SECs website, at www.sec.gov. In addition, security holders will be able to obtain free copies of the proxy statement at CSWCs website at www.capitalsouthwest.com by clicking on the Investor Relations link and then clicking on the SEC Filings link or by contacting CSWC by mail at Capital Southwest Corporation, 5400 Lyndon B. Johnson Freeway, Suite 1300, Dallas, Texas 75240, Attn: Corporate Secretary, or by telephone at 972-233-8242.��Additional Information and Where to Find It�

�Page *��CSWC and its directors and executive officers and certain other members of management and employees may be deemed to be participants in the solicitation of proxies from CSWC shareholders in connection with the proposed transaction and may have direct or indirect interests in the proposed transaction. Information about CSWCs directors and executive officers is set forth in CSWCs Proxy Statement on Schedule 14A for its 2014 Annual Meeting of Shareholders, which was filed with the SEC on June 17, 2014, and its Annual Report on Form 10-K for the fiscal year ended March 31, 2014, which was filed with the SEC on June 3, 2014. These documents are available free of charge at the SECs website at www.sec.gov, and from CSWC by contacting Corporate Secretary by mail at Capital Southwest Corporation, 5400 Lyndon B. Johnson Freeway, Suite 1300, Dallas, Texas 75240, Attn: Corporate Secretary, by telephone at 972-233-8242, or by going to CSWCs Investor Relations page on its corporate website at www.capitalsouthwest.com. Additional information regarding the interests of participants in the solicitation of proxies in connection with the proposed transaction will be included in the proxy statement that CSWC will file with the SEC.��Participants in the Solicitation�