Whether it's small "tuck in" acquisitions, large megamergers between industry giants, or even one firm taking a significant stake in another, the urge to merge remains strong.

We can't always tell the good deals from the bad. While we might get "synergy," we can just as easily get what investing legend Peter Lynch called "de-worsi-fication" -- weakening an existing business's core competency by grafting on wildly unrelated subsidiaries.

Breaking down the buildup
Let's take a shortcut to decipher the good deals from the dealbreakers. We'll see how more than 60,000 investors in the Motley Fool CAPS universe rate the companies hooking up this time around. If two highly rated companies seek a better life together, we figure they might also do well down the road. Conversely, if one company is highly rated and the other low, we might expect one set of investors to come out ahead, since those ratings forecast investors' opinions of each firm's future prospects.

Merger activity remains high this week. Here's a handful of some of the recently announced deals, and the CAPS community's ratings for the players involved on its scale of one to five stars (with five stars being the best):

Target

CAPS Rating

Acquirer

CAPS Rating

Deal Price

Chaparral Steel (NASDAQ:CHAP)

****

Gerdau AmeriSteel (NYSE:GNA)

*****

$4.22 billion

Applebee's (NASDAQ:APPB)

*

IHOP (NYSE:IHP)

***

$2.1 billion

Alcan (NYSE:AL)

****

Rio Tinto (NYSE:RTP)

****

$38.1 billion

DataMirror

N/A

IBM (NYSE:IBM)

***

$161 million

Despite the possibility that mergers may slow, there's still plenty of action, including private equity. According to Thomson Financial, private equity investments in M&A deals have tripled from last year to $281 billion and account for 35% of all mergers and acquisitions. That's more than double the 16% they represented last year.

While the boom continues, public-company cash hordes are also fueling the M&A boom. According to Cullen High Yield Value Equity, the companies on the S&P 500 had $1.2 trillion in cash on their balance sheets, accounting for 21% of their market value, and apparently burning a hole in their collective pocket.

Getting the information flow
So what do CAPS investors think about these targets and acquirers? Other than Applebee's, investors seem pretty keen on these companies, although the acquirers generally rate higher than the targets. The Alcan-Rio Tinto deal was not completely unexpected; the offer from its American rival Alcoa had been previously spurned, while the company welcomed Rio Tinto's offer. The IHOP offer for Applebee's, however, has some people scratching their heads, wondering whether two different types of restaurant chains can combine to create a single dynamic chain.

On the other hand, even though it's the smallest deal highlighted here, IBM's bid for Canada's DataMirror is considered a smart move for the venerable business-machines and software maker. Data, and access to it, are essential components of business today, and DataMirror's software instantly updates information as changes occur, across a variety of databases, without interfering with or slowing their operation.

Acquisitions are nothing new for IBM. The company has made more than 50 since 2003, and the DataMirror purchase should be an important step toward creating a single view of the customer -- the so-called "holy grail" of data management. At least, that's how IBM is playing it. So how do investors look at IBM?

More than 1,200 investors have rated the company, and more than 80% see it as outperforming the market. One-fourth of those investors are considered All-Stars, regularly outperforming their peers over time. They, too, endorse IBM's prospects going forward.

poetx thinks that IBM's new focus on service-oriented architecture (SOA), with which DataMirror fits nicely, will drive Big Blue forward.

This company is more diversified than most hi-tech concerns. Its hardware operations have held up in recent years as they've retooled to adapt mainframes to the Internet age. Their services, which had hit a plateau of sorts after helping define the IT services market, are on the uptick again due to an emphasis on SOA (services oriented architecture). Beyond that, they have taken chip design from boring to sexy by aligning themselves with the major computer game console developers (Nintendo, Sony, etc).

IBM is a major component of the DOW, so it probably won't stray too far, but its kind of like a mutual fund in and of itself, considering the combination of hardware, software and services it offers, and it is also geographically diversified, offering some protection during localized downturns and fluctuations in currency.

A Foolish offer
Will the merger announcement be the prescription for growth, or a new source of investor headaches? What's your take on these deals? Should investors accept the cash or take stock in the new company if offered? Tell the CAPS community whether the urge to merge is good to go, or whether it would it be better to fight for independence.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.