FOR IMMEDIATE RELEASE:
January 23, 2007

Contact
Frank Do, Managing Director (310) 806-6280
Bill Bujake, Vice President (310) 806-6280
Brian Maney, Director, Corporate Communications (301) 951-6122

AMERICAN CAPITAL JOINS LINCOLNSHIRE MANAGEMENT IN
WINNING PRIVATE EQUITY DEAL OF THE YEAR FROM
LOS ANGELES VENTURE ASSOCIATION

Bethesda, MD – January 13, 2007 – American Capital Strategies Ltd. (Nasdaq:ACAS) announced today that its Los Angeles office and Lincolnshire Management Inc. have won the Private Equity Deal of the Year Award from the Los Angeles Venture Association (LAVA) for their partnership in Bankruptcy Management Solutions Inc.  Lincolnshire was the equity sponsor on the transaction.  American Capital was the agent, a lender and co-invested in the equity with Lincolnshire.  The award was presented at LAVA’s annual awards dinner on Thursday, January 18.

“We are delighted that our success with Lincolnshire and Bankruptcy Management Solutions has been recognized by the Los Angeles Venture Association,” said Ira Wagner, American Capital Chief Operating Officer.  “This transaction is an excellent example of our ability to successfully partner with an equity sponsor and contribute to the growth of a portfolio company.”

American Capital has invested directly and through its funds under management $6.7 billion in 2006, $2.2 billion in the fourth quarter of 2006 and $454 million year to date.  Not including funds under management, American Capital has invested approximately $5.1 billion in 2006, $1.7 billion in the fourth quarter of 2006 and $430 million year to date.  For more information about American Capital’s portfolio, click here.

“We were pleased to support Lincolnshire throughout our investment in Bankruptcy Management Solutions,” said Frank Do, American Capital Managing Director.  “Our cumulative investments in BMS were highly successful, resulting in an outstanding return for American Capital.  We’re delighted to have been a part of its growth.”

"It was gratifying to participate in BMS' growth and to support Lincolnshire's investment," said Bill Bujake, American Capital Vice President .  “We value our relationship with Lincolnshire and the trust they place in us.”

“American Capital was a strong supporter of Lincolnshire and BMS throughout this investment.  They were very supportive and flexible in ways critical to achieving our mutual investment objective,“ said Allan D.L. Weinstein, Lincolnshire Managing Director . “We look forward to working with American Capital again in the future.”

In the third quarter of 2006, American Capital realized a gain of $22 million from the sale of Bankruptcy Management Solutions to Charlesbank and Ocwen Financial Corporation.  BMS is a leading provider of case management software, financial and other services to primarily Chapter 7 bankruptcy trustees.  American Capital recognized total proceeds of $68 million upon the exit, earning a 41% compounded annual rate of return on its investment, including interest, dividends and fees earned over the life of American Capital’s investment.  The proceeds received by American Capital were greater than the second quarter 2006 valuation of the investment by $1 million, or 2%.

In December 2003, American Capital invested $24 million in a revolving credit facility, senior term notes, senior and junior subordinated debt with warrants and common equity in BMS, associated with Lincolnshire Management's acquisition.  In December 2004, American Capital invested a subsequent $78 million in the recapitalization of BMS.  American Capital’s additional investment took the form of senior term debt and senior and junior subordinated debt.  Proceeds from that recapitalization were used to refinance existing debt and pay a dividend to the equity holders. As part of BMS' refinancing, American Capital received full repayment of its senior term notes and senior and junior subordinated debt, terminated its revolving credit facility and retained its equity investment.  Since its original investment in BMS, American Capital has realized a total gain of $25 million.

ABOUT AMERICAN CAPITAL

American Capital is the largest U.S. publicly traded alternative asset manager with $12 billion in capital resources under management.  American Capital, both directly and through its global asset management business, is an investor in management and employee buyouts, private equity buyouts, and early stage and mature private and public companies.  American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions, recapitalizations and securitizations.  American Capital invests from $5 million to $500 million in North America and €5 million to €400 million in Europe.

As of December 31, 2006, American Capital shareholders have enjoyed a total return of 617% since the Company's IPO - an annualized return of 23%, assuming reinvestment of dividends.  American Capital has paid a total of $1.4 billion in dividends and paid $22.44 in dividends per share since going public in August 1997 at $15 per share.

Companies interested in learning more about American Capital's flexible financing should contact Mark Opel, Senior Vice President, Business Development, at (800) 248-9340, or visit www.AmericanCapital.com or www.EuropeanCapital.com.

ABOUT LINCOLNSHIRE MANAGEMENT INC.

Lincolnshire Management Inc., a leading middle-market private equity firm, manages several funds with aggregate equity totaling approximately $900 million including Lincolnshire Equity Fund III, which has $433 million of committed capital.  Founded in 1986, Lincolnshire has completed more than 55 investments in middle-market companies.  Current portfolio investments include such leading companies as Prince Sports, Nursery Supplies Inc., Excelsior Radio Networks and Dalbo, Inc.  Other successful investments include Riddell Sports, 3SI Security Systems, Strategic Materials/NexCycle, Transcraft Corporation and American Coach Lines.  Headquartered in New York, Lincolnshire Management has offices in Atlanta, Boston, Chicago and Los Angeles.

Performance data quoted above represents past performance of American Capital. Past performance does not guarantee future results and the investment return and principal value of an investment in American Capital will likely fluctuate. Consequently, an investor's shares, when sold, may be worth more or less than their original cost. Additionally, American Capital's current performance may be lower or higher than the performance data quoted above.

This press release contains forward-looking statements. The statements regarding expected results of American Capital 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, national or international economic conditions, or changes in the conditions of the industries in which American Capital has made investments.