ASX-listed software stocks Reckon (ASX:RKN) and Fineos (ASX:FCL) both announced M&A deals this morning.

Reckon, which provides software for accountants and lawyers, revealed its legal group would merge with a recently formed start up called Zebraworks.

Zebraworks also helps legal firms go digital but is based in the US. Under the deal, Zebraworks will take a 30 per cent stake in the new expanded company.

Reckon said the deal provided the opportunity to expand the smallest part of its group into a highly attractive market place.

“It makes sense for us, in that the US is without a question such a big market,” Reckon CEO Sam Allert told Stockhead.

“We’ve already got a team, infrastructure and products in that market. To complement our business over there is a huge win.”

Reckon also announced its half yearly results, which showed a modest increase in group revenue of 2 per cent. The company says it will be paying a dividend in September.

Shares rose 11 per cent on Tuesday.

Reckon (ASX:RKN) share price chart


Fineos buys Limelight Health

Meanwhile, Ireland-headquartered insurance software stock Fineos will acquire US-based Limelight Health for $US75m ($105m).

The company announced an $85m capital raising this morning to help fund the acquisition.

Limelight Health, also an insurance software company, was only founded in 2014 but has seen substantial growth since then, according to Fineos.

Fineos has partnered with the company in the past but has now decided to make a play.

CEO Michael Kelly said clients were searching for a “one-stop-shop” for component-based software and the acquisition would help meet that demand.

“We are highly confident that the complementary nature of our products and team will further benefit our overall growth strategy and drive value for Fineos shareholders,” he said.

The company listed in August last year and before market open sat 84 per cent higher than its listing price.

Fineos (ASX:FCL) share price chart