CAPITAL  SOUTHWEST  Receives  Notice  From NASDAQ Due to Delay in Filing of Form
10-Q and Announces Restatement of Previously Issued Audited Financial Statements

Dallas, TX, November 20, 2007 - Capital Southwest Corporation (NASDAQ - CSWC)

On November 15, 2007, Capital Southwest  Corporation (the "Company")  received a
NASDAQ Staff Determination  letter stating that the Company is not in compliance
with  the  filing  requirements  for  continued  listing  set  forth  in  NASDAQ
Marketplace  Rule  4310(c)(14) and that its common stock is subject to delisting
from The NASDAQ Stock Market. The notice, which the Company expected, was issued
as a result of the Company's failure to file its semi-annual report on Form 10-Q
for the quarter  ended  September  30,  2007 with the  Securities  and  Exchange
Commission by the required  deadline.  The Company had  previously  filed a Form
12b-25 with the SEC indicating that the Company would be unable to file its Form
10-Q by the original  filing  deadline of November 9, 2007 due to the  Company's
ongoing review of its deferred taxes on unrealized appreciation of investments.

The Company  will  request a hearing  before the NASDAQ  Listing  Qualifications
Panel to review the Staff  Determination  letter and request continued  listing.
The Company can make no assurances that the NASDAQ Listing  Qualifications Panel
will grant the Company's request for continued listing. Under NASDAQ Marketplace
rules, the Company's request for a hearing will automatically stay the delisting
of the Company's common stock pending the issuance of a written determination by
the NASDAQ Listing Qualifications Panel.

After  reviewing  the  accounting  treatment  for deferred  taxes on  unrealized
appreciation of investments, the company has determined its long-standing policy
of recording deferred taxes on unrealized appreciation of investments was not in
conformity  with  AICPA  Audit  and  Accounting  Guide  for  Investment  Company
standards. Management has determined that while it was possible that the Company
would not maintain its qualifying status, as a Regulated  Investment Company, it
was probable that it would maintain such status. Thus the deferred tax liability
consistently  recorded  and  disclosed  since  inception  should  not have  been
recognized.  As a result,  the Company will be restating  its audited  financial
statements  for the fiscal year ended March 31, 2007,  as well as its  unaudited
interim  financial   statements  for  the  quarter  ended  June  30,  2007.  The
restatement  will  eliminate  the  accrual  for  deferred  taxes  on  unrealized
appreciation of  investments,  thus increasing the net asset value per share for
the periods to be  restated.  The Company  plans to file its Form 10-K/A for the
fiscal year ended  March 31,  2007,  Form 10-Q/A for the quarter  ended June 30,
2007,  and  Form  10-Q  for the  quarter  ended  September  30,  2007 as soon as
reasonably  practicable.  Our delay in filing has been a result of our reviewing
the accounting treatment related to deferred taxes.

On October 23, 2007 the Company  released its net asset value at  September  30,
2007 of  $437,546,529,  equivalent  to  $112.50  per share  after  deducting  an
allowance of  $169,785,000,  equivalent to $43.66 per share for deferred  taxes.
The  Company  now plans to restate its  previously  reported  net asset value at
September 30, 2007 to reflect the following:

  o    An increase in net assets from operations                    $169,785,000
  o    An increase in net asset value per share                           $43.66

  Net Asset Value at September 30, 2007, as previously reported     $437,546,529
     Add back allowance for deferred taxes                           169,785,000
  Net asset value at September 30, 2007, as restated                $607,331,529
  Net asset value per share at September 30, 2007, as restated           $156.16




Capital  Southwest  Corporation,  founded in 1961, is a venture capital business
development investment company headquartered in Dallas, Texas.

This press release contains  forward-looking  statements regarding the Company's
plans to request a hearing with NASDAQ.  These  forward-looking  statements  are
subject to risks and  uncertainties,  and actual results could differ materially
from those projected. These risks and uncertainties include, but are not limited
to, the timing and  outcome  of the NASDAQ  hearing;  the impact of any  actions
required  or taken as a result of such  review or the NASDAQ  hearing and review
process.

Contact: Gary L. Martin or Tracy L. Morris
         972-233-8242


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