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Wealth management software firm Advent Software announced plans Thursday to acquire rival Black Diamond Performance Reporting for $73 million—a move that will cement Advent’s hold in the portfolio management software playing field.

Some say Advent feared it was losing market share to Black Diamond as firms adopted Black Diamond’s web-based product over Advent’s Axys. The two firms came to the table about three and a half months ago to discuss the possible acquisition, says Advent’s president Peter Hess.

“For Advent, they came to a point where they had to develop something to compete with Black Diamond or buy Black Diamond as a whole,” says Gil Luria, a senior vice president and analyst with the Los Angeles-based Wedbush Securities who has covered Advent Software for three years. “It tells us that Black Diamond had a compelling product that [Advent] wanted now, and didn’t want to wait to build.”

Black Diamond will remain headquartered in Jacksonville, Fla. and its founder and CEO Reed Colley will become the general manager of the newly named Black Diamond group; Hess will remain president of Advent, which is based in San Francisco. The deal is expected to close in the second quarter of 2011.

The two firms have gone toe to toe on many occasions recently. Two months ago, Advent lost the business of Presidio Financial Partners to Black Diamond, one of 100 clients it has acquired in past year, according to David Welling, Black Diamond’s chief solutions officer.

And yet Advent has focused more on up market clients in recent years, vying for hedge fund and asset management business with its Geneva and Advent Portfolio Exchange (APX) lines. The average assets of an Advent customer clock in at about $3 billion, while average assets for Black Diamond clients sit around $200 million, according to Luria.

That shift in focus for Advent gave Black Diamond more opportunities to charge after the smaller advisory marketplace.

Still, Advent has maintained its Axys product, which was viewed as a direct competitor to Black Diamond’s products. While Hess is emphatic Advent will continue to support Axys, most of the firm’s resources will be aimed at APX, Geneva and now Black Diamond, he says. Clients won’t be forced to drop Axys, but those craving the latest advancements are likely going to migrate eventually.

“We’re going to be supporting [Axys] and enhancing the functionality mainly with compliance and compatibility,” says Hess. “Yet most of the impactful innovations are going to occur on APX, Black Diamond and the Geneva platform.”

The two firms will look for synergies, said Colley, with Black Diamond taking advantage of Advent’s existing custodial feeds and pipelines rather than investing in its own. But the two firms will remain focused on their own respective marketplaces.

“We’re going to be hyper sensitive that we don’t dilute Black Diamond’s focus on the advisory vertical,” says Hunt. “There are certainly assets they have and we have that will make sense over time. But I think we’re going to be real sensitive to harming each other’s focus.”