NEWS

John Erickson, CFO (301) 951-6122

Bethesda, MD - May 3, 2004 - American Capital Strategies Ltd. (Nasdaq:ACAS)stockholders re-elected two directors of the Company, increased the Company's total authorized shares of common stock from 70 million to 200 million, approved the Company's 2004 Employee Stock Option Plan and approved a proposal to issue warrants to purchase up to 10 million shares of the Company's common stock. Stockholders also approved the continuation of Ernst & Young LLP as the Company's independent auditors.

Mary C. Baskin and Alvin N. Puryear were re-elected to three year terms on the American Capital Board of Directors. Ms. Baskin is Managing Director of the Ansley Consulting Group, a retained executive search firm. She serves on the American Capital Board's Audit and Compliance Committee. Mr. Puryear is the Lawrence N. Field Professor of Entrepreneurship and Professor of Management at Baruch College of the City University of New York. He serves on the American Capital Board's Executive Committee and the Compensation and Governance Committee.

"We had an excellent annual stockholders meeting and answered a number of stockholder questions, including the impact of a rising rate environment on American Capital. We explained that because our portfolio is hedged, changes in interest rates should have little impact on our marginal yield," said Chairman, President and Chief Executive Officer Malon Wilkus. "We also had the opportunity to address the impact of the one new Business Development Company and the several that hope soon to go public. We believe that many of these firms will target other markets and are unlikely to become competitors. More importantly, we believe these new funds corroborate our business model, which we believe will attract significantly greater investor interest, and that these new funds will make it much harder for mezzanine partnerships to raise capital. There are over 100 mezzanine partnerships with which we compete, representing far more capital than that proposed to be raised by new BDCs."

As of April 30, 2004, American Capital shareholders have enjoyed a total return of 213% since the Company's IPO - an annualized return of 19%, assuming reinvestment of dividends. American Capital has declared a total of $13.82 per share in dividends since its August 1997 IPO.

American Capital is a publicly traded buyout and mezzanine fund with capital resources in excess of $2.7 billion. American Capital is an investor in and sponsor of management and employee buyouts; invests in private equity sponsored buyouts, and provides capital directly to private and small public companies. American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions and recapitalizations.

Companies interested in learning more about American Capital's flexible financing should contact Mark Opel, Principal, at (800) 248-9340, or visit our website.

This press release contains forward-looking statements. The statements regarding expected results of American Capital Strategies are subject to various factors and uncertainties, including the uncertainties associated with the timing of transaction closings, changes in interest rates, availability of transactions, changes in regional or national economic conditions, or changes in the conditions of the industries in which American Capital has made investments.