The pace of corporate takeover activity on Wall Street may have slowed, but the computer software industry remains a place where medium-size deals are plentiful.

Reflecting that trend, two local software companies, Vienna-based Legent Corp. and Reston-based Systems Center Inc., are among those that have been hot on the acquisition trail.

One reason for the high-volume of deals in the industry has been that small companies with relatively little market presence are finding it harder to achieve the sales volume necessary to keep them alive. With industry growth slowing, many smaller firms are seeking refuge in the arms of companies possessing the market presence and distribution pipeline to get more of their software products to customers.

"The number of acquisitions in the {software} industry is slightly above last year, which was close to the all-time record," said Harvey Poppel, a partner in Broadview Associates, an information technology and merger and acquisition firm which has done business with Legent.

"We see no slackening in software deals. But we do see a change in the mix. There are fewer really large deals because there aren't that many large firms left to buy. There's a middle market focus now -- companies in the $5 million to $30 million range."

Enter Legent and Systems Center, checkbooks in hand. Legent, which reported 1989 revenue of $124.6 million, and Systems Center, which had revenue last year of $66.2 million, are big enough to play the role of buyer. Their positions have been strengthened by the difficulties smaller software firms have had in attempting to raise money recently from venture capital firms or through initial sales of stock to the public.

Legent last year acquired Business Software Technology Inc. in a stock transaction valued at $47 million. Legent issued 1.48 million of its own shares for the 100-employee company, a $15-million-a-year developer of a product that tracks other companies' software products. the deal provided Legent, which closed Friday at $24, down 75 cents, immediate access to a market in which it had previously not been a player. The deal also added a key product to Legent's software offerings, which range from automating the management of company computer centers to helping companies control computer costs.

"For us, being part of Legent gave us a substantial opportunity for expanding our product line through an acquisition," said Chuck Riegel, vice president of marketing for Business Software. "That's something we definitely wanted to do. We were talking about it before Legent came along. Without Legent, we would have had to go to a bank and give up {substantial} equity. Going with Legent gave us funds internally to expand our product line and develop resources that we couldn't have done otherwise. Legent bought us because it gave them exposure in a market where they had none and which they wanted to get into as it relates to their overall informations systems strategy."

Such maneuvers are exactly what Legent chairman and chief executive Joe Henson has planned as part of the firm's crusade to become a $1 billion company.

"As smaller companies see the necessity of gaining worldwide sales and distribution channels in an increasingly global industry, they see the necessity of being acquainted with large, stable companies that can offer them those capabilities," Henson said.

In addition to his other responsibilities, Henson became Legent's president following the resignation of Peter Barris earlier this month. Barris could not be reached for comment; Henson said the move would make the company more efficient as it grows.

"The current consolidation in the industry gives us a fantastic opportunity to define additional niches and product areas in which we can become the best," Henson said.

That feeling apparently is prevalent at Systems Center as well. The company last month completed the acquisition of Software Developments International, an Australian manufacturer of software that links together different computers. Systems Center in May had acquired from another company the worldwide marketing rights to the Australian company's software.

Both transactions, valued at about $87 million, vaulted Systems Center into what chairman and chief executive Robert Cook perceives to be a growth market. In the past, Systems Center has concentrated on software products that help operate IBM and IBM-compatible computers and transfer data among different computers.

"There's absolutely consolidation going on in our industry, and you have to look at the industry mix and see what others are bringing to the table," Cook said. "Do we have to get larger? If we have to do it, will our current market support our current level of growth rate? With VM {the company's original IBM operating software business}, the answer was no. Business was shrinking away on the systems software side."

According to Cook, the newly acquired product makes Systems Center number two in the networking market -- the market for software that links computers -- behind International Business Machines Corp. But the company has paid for it, at least in the short term. Reflecting what Cook called distractions tied to the acquisitions and the difficulties in assimilating 225 new employees -- almost doubling the size of the company -- Systems Center earlier this month said it expected a second-quarter loss of $5 million to $6 million.

Nervous investors caused its stock to drop more than four points the day of the announcement to $17.875. Systems Center stock closed Friday at $16.35, down 25 cents.

The recent plunge in the company's stock price occured the same day John Barry resigned as president and chief operating officer of Systems Center, a decision both Cook and Barry said was due to Cook's decision to remain as chief executive and Barry's previously professed desire to attain that position. Both men also said the decision was unrelated to the quarter's bad news.

Some analysts expect the recent string of software acquisitions, like those involving Legent and Systems Center, to continue for the foreseeable future.

"The consolidation's being driven by products that are great technologically but don't have the sales, marketing and support structure to make them zoom," said Bob Therrien, an analyst with the PaineWebber investment firm. "Offering that support is an essential part of both Legent's and Systems Center's overall {competitive} strategy."

But, said Therrien, there's a significant difference on the road to implementing that strategy. Legent is competing against companies its own size. Systems Center is going one-on-one with the biggest of them all.

"Systems Center just bet the company on a product that's right in IBM's strategic path," he said. "That's a problem. IBM's recognized that allowing users to manage their network is the place to be. Systems Center may do real well in that market, but it's hard to sell against IBM in a strategic product area even with a product that's superior.

"Legent doesn't have that problem. They have great products in a market that's underpenetrated. Their entire product portfolio is phenomenal. ... They had a very strong quarter. Everything important was up in all the right areas. I think they can pull it {becoming a $1 billion company} off."

Legent:

Headquarters: Vienna

Founded: 1989

Fiscal 1989 revenue: $124.6 million

Fiscal 1989 profit: $23.1 million

Assets: $147.1 million

Chairman, CEO: Joe M. Henson

Employees: 800

Systems Center:

Headquarters: Reston

Founded: 1981

Fiscal 1989 revenue: $66.2 million

Fiscal 1989 profit: $10.6 million

Assets: $64.5 million

Chairman, CEO: Robert E. Cook

Employees: 485