Whether it's small "tuck-in" acquisitions, megamergers between industry giants, or even taking significant stakes in another company, the urge to merge is 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-worse-ification:" weakening an existing business's core competency by grafting on wildly unrelated subsidiaries.

Breaking down the buildup
We're going to take a shortcut to decipher the good deals from the dealbreakers. We'll see what interested investors from our 65,000-member Motley Fool CAPS universe think about these firms hooking up. If two highly rated companies seek a better life together, we figure they might also do better down the road. Conversely, if only one company is highly rated, we might expect one set of investors to come out ahead, since those ratings forecast investor sentiment of future prospects.

Could troubles in the capital markets finally be taking a toll in the M&A arena? The deals won't stop, but with the loss of easy credit, we can expect to see more stock swaps play a role in financing transactions.

Here are some of the recently announced deals, and the CAPS community's ratings for the players involved, on its scale of one to the maximum five stars:

Target

CAPS Rating

Acquirer

CAPS Rating

Deal Price

Oxygen Media

NR

General Electric (NYSE:GE)

****

$925 million

Jaiku

NR

Google (NASDAQ:GOOG)

**

Undisclosed

Miramar Mining

****

Newmont Mining (NYSE:NEM)

****

$1.53 billion

Business Objects

****

SAP (NYSE:SAP)

**

$6.8 billion

United Industrial (NYSE:UIC)

*****

Textron (NYSE:TXT)

****

$1.1 billion

CAPS ratings courtesy of Motley Fool CAPS; NR = not rated.

While merger activity has slowed to a relative trickle, with only $192 billion in deals being consummated in September, the first nine months of 2007 have still been the busiest ever. According to Thomson Financial, for this year up to Sept. 30, more than $3.6 trillion in deals were made, surpassing the figure for all of 2006 and nearly doubling 2004's hectic pace. Dealogic also reports that there has been more than $13 trillion worth of deals made since 2004, making it the richest period since the tech boom at the turn of the century.

Getting the information flow
So what do CAPS investors think about these targets and acquirers? These deals might not be bigger than some we've seen in past weeks, but the companies are generally well-liked, with most of the publicly traded companies garnering four- or five-star ratings from investors.

Finding its way to a merger
SAP's acquisition of Business Objects marks a departure for the applications giant, particularly since it has been critical of rival Oracle (NASDAQ:ORCL) for straying outside its core business. Now it has throwing in the towel and scooping up the business intelligence software concern -- perhaps overpaying out of fear that Oracle's voracious appetite would snap it up first.

Google's Jaiku buy seems more idiosyncratic. The microblogging service is a competitor of Twitter, a company started by the founder of Blogger (which Google bought), and with which Google already has a relationship. Speculation on the turnabout may rest on Jaiku being both cheaper and better for mobile platforms than Twitter.

In his top bull pitch for Google, CAPS All-Star NakoQuant gives several reasons why the tech giant will continue to rise, despite its seemingly richly priced stock:

    1. They are the fulcrum in an important, winning market. Internet advertising is growing at a healthy rate, and is likely to continue to do so for quite some time. More importantly, GOOG is the centerpiece of the Internet for many users.

    2. They will be able to monetize this in many ways. They are innovative: GOOG spews out products. The relative lack of income from these products is seen as a negative by many. But think of GOOG as a venture capitalist instead, and the importance of this approach becomes clear. Instead of placing a few very expensive bets, they place many cheap bets and then back the winners. 

    3. Their competitive advantage is difficult to replicate.

You can read all of his insights here.

A value-added offer
What's your take on these deals? Should investors accept the cash, or take stock in the new company if offered? Only at Motley Fool CAPS is your opinion as valuable as the pros. Tell the CAPS community if the urge to merge is good to go -- or whether it's 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.