From tiny acquisitions to massive conglomerate combinations, Wall Street's urge to merge remains strong. Some of these deals might generate 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 dealbreakers?

Breaking down the buildup
To help, we'll turn to the 95,000 investors in Motley Fool CAPS. A combination of two companies with high CAPS ratings should bode well for the new firm'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

St. Jude Medical (NYSE: STJ)

*****

EP Medsystems

NR

$92.1 million

EMC (NYSE: EMC)

*****

Iomega (NYSE: IOM)

**

$213 million

McKesson

****

McQuarry Brothers Drug Co.

NR

$190 million

Medco Health Solutions (NYSE: MHS)

*****

Europa Apotheek Venlo

NR

$120 million

Nuance Communications (Nasdaq: NUAN)

*****

eScription

NR

$363 million

Discover Financial Services (NYSE: DFS)

**

Citigroup's Diner's Club

**

$165 million

Kinetic Concepts

*****

LifeCell (Nasdaq: LIFC)

****

$1.7 billion

Diodes

*****

Zetex

NR

$176 million

Eagle Rock Energy Partners

***

Stanolind Oil & Gas

NR

$79 million

Honeywell International

****

Norcross Safety Products

NR

$1.2 billion

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

A bear of a time
Although there seem to be a greater number of deals pending, the first quarter's $736 billion is actually the smallest global dollar value amount in six years. The total number of deals is up 14% to just shy of 9,200 deals; however, each deal is worth less on average. U.S. deal values declined 41% to $203 billion, although both Russia (up 173% to $33 billion) and China (up 43% to $35 billion) have picked up some of the slack.

Store it in your memory
It's a name from The Motley Fool's own past, and one that will certainly be associated with the early days of the tech revolution. Iomega, manufacturer of the revolutionary Zip drive, also heralded the arrival of another important revolution: the online community of the Fool, where individual investors traded information about the drive maker that no Wall Street analyst could have access to. The story played out on the discussion boards, and as Zip drive demand soared (it's one of the reasons your computer no longer has an A: or B: drive in it; floppies just couldn't match the storage capacity of the portable and affordable Zip), investors flocked to the stock, and to The Motley Fool to document it.

Yet Iomega's glory days are well behind it. First the drive maker refused to acknowledge its notorious "Click of Death" problem. Then it found itself up against an even more formidable opponent: recordable CDs. In the end, Iomega's days were numbered. That, too, was recorded on the Fool's website, and while The Motley Fool still thrives today, Iomega found that EMC's offer was finally too good to pass up.

Top-rated CAPS All-Star pigsfeet007, with a 98.44 player rating, detailed last June a personal experience with the drive from its early days, which perhaps helps explain why it was ultimately doomed:

Everything was looking great ... UNTIL.... Iomega starts spending millions of dollars to on a cheesy advertising campaign starring Leslie Nielsen. This drove the demand for zipdrives even higher forcing Dell to ship their systems with old A: drives. Guess what, by the time IOM was ready to crank these things out the war was over. The CDRW had won. This management team ... botched the chance to become THE STANDARD media drive in computers. They blew all their cash on a naked gun gimmick advertising campaign instead of figuring out how to supply the demand that was already there.

Or as fellow investor willsmithorg simply puts it, "They kept their monopoly rather than creating an ecosystem," and the public was unwilling to play along.

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 firms involved to remain independent.

Discover Financial is a Inside Value selection. Nuance Communications is a Motley Fool Hidden Gems pick. You can buy into a free trial subscription free for 30 days to any of the Fool's investment services.

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.