Whether it's small "tuck in" acquisitions, large megamergers between industry giants, or even taking significant stakes in another company, 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-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 deal-breakers. We'll see how the 77,000 investors in the Motley Fool CAPS universe rate the companies hooking up. If two highly rated companies seek a better life together, we figure they might also do better 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 investor sentiment of future prospects.

Could troubles in the capital markets finally be taking their toll in the M&A arena? While deals won't stop, with the loss of easy credit expect to see more stock swaps play a role in financing transactions. 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 the maximum five stars:

Acquirer

CAPS Rating

Target

CAPS Rating

Deal Price

Atheros Communications (NASDAQ:ATHR)

*****

u-Nav Microelectronics

NR

$54 million

ON Semiconductor (NASDAQ:ONNN)

****

AMIS Holdings

*****

$915 million

Radiant Systems

****

Quest Retail Technology

NR

$54 million

Regency Energy Partners

*****

CDM Resource Management

NR

$655 million

Teradyne (NYSE:TER)

**

Nextest Systems

****

$325 million

Inverness Medical Innovations

****

BBI

NR

$145 million

JDS Uniphase (NASDAQ:JDSU)

**

American Bank Note Holographics

NR

$138 million

LAM Research (NASDAQ:LRCX)

***

SEZ Group

NR

$568 million

STM Microelectronics

***

Genesis Microchip (NASDAQ:GNSS)

**

$336 million

Hewlett-Packard (NYSE:HPQ)

****

NUR Macroprinters

NR

$117.5 million

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

While worldwide merger activity rose in November to $286.1 billion, U.S. deal volume declined 73% from a year earlier, to $51.1 billion, bringing it back down to the lows reached in August and September. Yet it's a change from the number of deals announced over the previous week, which was pretty light. Still, as the credit crunch deepens, a number of investors are looking to back out of deals that were previously announced. Private equity may soon have to prove itself to boards of directors that it won't be backing out of acquisitions when things get tough.

So what do CAPS investors think about these targets and acquirers? While these deals are somewhat smaller, in keeping with a trend we've seen recently -- only one approaches $1 billion in value -- most of the companies doing the buying are generally favored by investors, having garnered ratings of four stars or better.

It flickers
Today, American Bank Note Holographics provides governments and corporations around the world with holographic security features for currency, licenses, pass cards, and even packaging. That hologram on your credit card? This company makes it. JDS will use the acquisition to expand its portfolio of security and brand authentification technologies.

Some 500 CAPS players have rated JDS Uniphase, with 79% of them viewing it as an outperform. CAPS All-Stars, those players with the best investing records, aren't as enthusiastic, with only 62% of those chiming in giving it the thumbs-up. CAPS investors like caravaggiosnose see the company finally coming into its own, and perhaps even posting a long-forgotten benefit: profits!

Just won its big securities class action case, and is streamlining its portfolio. Still a behemoth, watch for it to narrow its losses even further and finally turn a profit for the first time in ... well, almost forever ... next year.

Yet the bears have seen hope dashed in the past by management practices, and many don't think the turnaround is anywhere near complete. Earlier this year,CAPS player BadBoysDriveAudi figured that the company had been too focused on share price, and not focused enough on product:

I haven't had a favorable opinion of this company since it burned BRLC back in 2004. The recent 1 for 8 reverse stock split just adds [fuel] to the fire. I have yet to see one of these events actually pan out for a company.

Instead of focusing on the stock price, how about management focus on actually producing a product/service that the public actually wants -- and then deliver in a timely fashion?

Perhaps this acquisition is just that -- an attempt to offer a product that will once again make JDS Uniphase relevant.

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? Tell the CAPS community whether the urge to merge is good to go, or whether it would be better to fight for independence.

Atheros is a Motley Fool Hidden Gems recommendation. Brighten up your portfolio with a 30-day risk-free trial subscription.

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.