From tiny acquisitions to massive conglomerate combinations, the urge to merge remains strong on Wall Street. Some of these deals might generate some sought-after synergy, but others could create what Peter Lynch called "diworsification" -- weakening a business's core competency by grafting on wildly unrelated subsidiaries. How can we tell the good deals from the deal breakers?

Breaking down the buildup
To help, we'll turn to the 105,000 investors in Motley Fool CAPS. A combination of two companies with high CAPS ratings should bode well for the new company's future results, while a high-rated company that joins a lower-rated one may benefit one set of investors more than the other.

Despite troubles in the capital markets, the deals won't stop; they simply might involve more stock and less cash. Here's a handful of recently announced deals and the ratings for each participating company on CAPS' five-star scale:

Acquirer

CAPS Rating
(5 Max)

Target

CAPS Rating

Deal Price

CBS

**

CNET (NASDAQ:CNET)

****

$1.8 billion

Trico Marine Services (NASDAQ:TRMA)

*****

Deep Ocean

N/R

$682 million

Finisar (NASDAQ:FNSR)

****

Optium (NASDAQ:OPTM)

****

$212 million

Westinghouse Air Brake Technologies (NYSE:WAB)

*****

POLI

N/R

$80 million

Staples (NASDAQ:SPLS)

****

Corporate Express

N/R

$2.3 billion

Tower Semiconductor

**

Jazz Technologies
(AMEX:JAZ)

N/R

$40 million

Harleysville National

**

Willow Financial Bancorp

*

$162 million

CAPS ratings courtesy of Motley Fool CAPS; N/R = not rated.

A bear of a time
Although we've seen a number of deals pending, the first quarter's $736 billion is the smallest global dollar value amount in six years. The total number of deals rose 14% to more than 9,100 deals -- they're just worth less. The main reason is the 41% decline in U.S. deal values down to $204 billion, though Russia (up 173% to $33 billion) and China (up 43% to $35 billion) have made up some of the slack.

A healthy dose of going private
There's an oft-used word when two companies agree to merge: synergies. This term refers to the supposedly seamless meshing together of two businesses to form a stronger, better company. But more often than not, it seems to be a rationalization for empire-building on management's part. The highly touted cost savings fizzle, the much-anticipated efficiencies evaporate, and investors are stuck with a company mired in the muck. "Diworsification," indeed.

On occasion, mergers do pan out as planned, and you end up with a more agile company able to take on the competition. Such is expected to be the case with wireless network component maker Finisar and its proposal to take over telecom component maker Optium in a $212 million all-stock deal. The natural fit between the two lines of business will have the combined company becoming the largest optical components seller in terms of revenue, with the scale and heft to move forward faster.

Couple that with revenue guidance higher than analysts' predictions, and you have a company rebounding. Back in March, the market took umbrage at Finisar's report, even though it looked solid on the surface, and knocked the stock down. My Foolish colleague Anders Bylund thought the reaction was a gift, considering the strength of the report, and urged investors to ride the rocket. The stock is now up more than 40% since that sage analysis.

Finisar's options-backdating problems are a dim, bad memory now. Even back in November, CAPS All-Star player AaronRogers said that with such problems behind the company, it was only a matter of time before profitability followed:

[Profitability] is coming. Most importantly the back dating will come to an end. Nasdaq compliance will follow. That will create an immediate pop and then on to technicals which will be showing a marked improvement. This pick is almost [too] easy. Only looks tough right now.

Optium backer j1acostahotmail believed that the telecom component maker's innovations would make it a player in a competitive landscape, and that's just what seems to have happened. 

The telecom industry and [its] inherent competitiveness will keep this company and [its] innovative designs working and producing, while the older suppliers that have focused upon non-optical or hardwired optical systems will be forced to retool and thereby lose [market share].

A value-added offer
What's your take on these deals? At Motley Fool CAPS, your opinion is as valuable as the pros'. Tell the CAPS community whether the urge to merge is good to go -- or whether you think it's better for the companies involved to remain independent.