Whether it's small "tuck-in" acquisitions, mega-mergers between industry giants, or even significant stakes in another company, the urge to merge remains strong.

We can't always tell the good deals from the bad. We might get "synergy," or 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 78,000 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 rated high 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? The deals won't stop, and the loss of easy credit means that you can expect to see more stock deals and fewer cash transactions. Here's a handful of some recently announced deals with 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

Affymetrix (NASDAQ:AFFX)

***

USB Corp.

NR

$75 million

Management-led Private Group

NR

Waste Industries (NASDAQ:WWIN)

*****

$544 million

Ingersoll-Rand (NYSE:IR)

*****

Trane (NYSE:TT)

****

$10.1 billion

National Oilwell Varco (NYSE:NOV)

*****

Grant Prideco (NYSE:GRP)

*****

$7.37 billion

S&T Bancorp

NR

IBT Bancorp (NYSE:IRW)

*

$171 million

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

This week brings a drop in the number of deals announced since the previous week, which had a flurry of activity. Still, as the credit crunch deepens, a number of investors are looking to back out of previously announced deals. Private equity firms may soon have to reassure target boards of directors that they won't back out of acquisitions when things get tough.

So what do CAPS investors think about these targets and acquirers? While these deals are in keeping with a trend we've seen recently -- two of them in excess of $1 billion are considered significant industry mergers -- most of the companies are well-favored by investors, having garnered ratings of four stars or better.

Drilling for dollars
The merger between oil-services firms National Oilwell Varco and Grant Prideco continues an industry trend toward consolidation. As oil company profits soared this year, there were a number of large-ticket deals. Yet despite the fact that both companies have high CAPS ratings, the market's initial reaction to the announcement was to shave some 10% off National Oilwell Varco's value, perhaps in the belief that it is paying too much for the chance to expand overseas.

Nearly 1,000 CAPS players have rated National Oilwell Varco, with 98% of them viewing it as an outperform. CAPS All-Stars, the players with the best investing records, are almost unanimous in giving it the thumbs-up.

Top-rated All-Star TDRH, with a perfect 100.00 player rating, sees National Oilwell as being uniquely positioned to benefit from industry trends.

High price of oil shifts demand for drilling services, which doubles and triples dayrates, which shifts demand for drilling equipment, spare parts, and new platform construction. There are a large number of new rigs coming on line, with many more under construction, but these dayrates are set through 2008 and when NOV's customer base has money they want to spend it on upgrading their fleet. This company has the complete product offering, borderline monopoly and should be in a great position through 2009. The decline in the dollar should improve its ability to compete globally.

Another CAPS All-Star, saunafool, sees National Oilwell as still being in the early stages of a long growth process:

Oil drilling is in a massive growth phase. 20 years of underinvestment in capital equipment, combined with strong global growth has created the high prices (along with a falling dollar).

Global growth might ease, but we are only about 3 years into playing catch-up on the capital equipment side of the business. NOV has a long way to go to the upside.

Did National Oilwell overpay for Grant Prideco? The market seems to thinks so, but perhaps the strength of the underlying business will prove the naysayers wrong.

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 whether the urge to merge is good to go -- or it's better to fight for independence.

Affymetrix is a Motley Fool Rule Breakers recommendation. Merge your ideas with a 30-day, risk-free trial subscription to brighten up your portfolio.

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.