The Math Box, a local retail chain specializing in computer games, microcomputers and related electronic products that was started seven years ago with a $5,000 investment, has been acquired by a Milwaukee-based holding company for an undisclosed amount.

Two other acquisitions involving area firms were announced last week, local currents in the billion-dollar national merger wave that has reached unprecedented levels this year.

Allied Capital Corp. of Washington, a venture capital company that invests in small businesses, announced an agreement to acquire Virginia Capital Corp. of Richmond in an exchange of stock totaling an estimated $4.2 million.

And Analytic Disciplines, Inc., of Vienna, a $1 million-a-year engineering services company with Navy contracts to develop antisubmarine warfare programs, has been acquired by Evaluation Research Corp., a larger technological services firm also headquartered in Vienna.

Allied Capital, with assets of $37 million, is a holding company that makes loans and investments in small businesses.

Under the agreement, shareholders of Virginia Capital, another small business investment company with assets of $9 million, will receive four shares of Allied Capital for each share of Virginia Capital that they own. The merger must be approved by at least two-thirds of Virginia Capital's shareholders, as well as by the Small Business Administration, according to David Gladstone, executive vice president of Allied Capital. The agreement is also subject to final approval by Virginia Capital's board, following a final appraisal of their holdings, he added.

Allied Capital has some 150 current SBA-guaranteed loans to small business. Through a federally-approved small business investment company subsidiary, it also has invested in 65 companies in return for limited amounts of the companies' stock. Its portfolio includes shares of nearly 4 percent each in Atlantic Research Co. and Pandick Press and a 10 percent share of Alexandria Cablevision Co.

Virginia Capital, headed by Robert Pratt of Richmond, has investments in approximately 35 companies.

The Math Box operates four retail stores in Virgina, Maryland and the District, markets mini-computers, and sells and services computers to schools and other educational institutions.

It was founded in 1974 by Gerald I. Freed, then a 21-year-old University of Maryland student, in a small location in College Park with $5,000 borrowed by Freed's father. Initially, they sold only calculators.

Freed, later joined by his younger brother Steven, built the business rapidly. Last year, Math Box sales were $3 million and are expected to reach $4.5 million this year.

The purchase price received by the Freed brothers was not disclosed, except that the amount "is less than $1 million," according to Avner Parnes, new president of the company.

Parnes, 40, an economist and business consultant from Skokie, Ill., and Russell R. Stepke, managing partner of American Capital Group, a Milwaukee venture capital firm, arranged the acquisition through local brokers Crandus-Lenoff, Inc. A holding company headed by Stepke and Parnes called Computer Enterprises Inc. of Wheaton now owns The Math Box. Gerald Freed will be executive vice president and a minority shareholder, but Steven Freed is no longer involved in the business, Parnes said.

The company intends to open new locations in Springfield, Fairfax and Rockville and is considering expansion to other cities as well, Parnes said.