From tiny acquisitions to massive 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 deal breakers?

Breaking down the buildup
To help, we'll turn to the 100,000 investors in Motley Fool CAPS. A combination of two companies with high CAPS ratings should bode well for the new company's 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 are some 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

Cablevision (NYSE: CVC)

*

Sundance Channel network

NR

$496 million

Illinois Tool Works

*****

Enodis

NR

$2.1 billion

First Place Financial

*

Camco Financial

NR

$97.2 million

KBR

*****

BE&K

NR

$550 million

Knight Capital (Nasdaq: NITE)

*****

Libertas

NR

$75 million

Heartland Payment Systems

*****

Network services business of Alliance Data Systems (NYSE: ADS)

****

$77.5 million

Autodesk (Nasdaq: ADSK)

****

Moldflow

*****

$297 million

Infogrames

NR

Atari

NR

$11 million

Microfocus

NR

Net Manage

NR

$73.3 million

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

A bear of a time
Although there seems to be a greater number of deals pending, in fact the $736 billion of deals in the first quarter was the smallest global amount in dollar value in six years. The total number of deals was up 14% to more than 9,100 deals: They're just worth less. The main reason is the 41% decline in U.S. deal values to $203 billion, though some of the slack has been made up in both Russia (up 173% to $33 billion) and China (up 43% to $35 billion).

An inconvenient truth
Butch Cassidy never had it so good, but maybe that's because Paul Newman is off growing organic foods. Regardless, Robert Redford's role as the Sundance Kid was the inspiration for a series of investments Redford has made through his Sundance Institute to promote independent movies and his environmental and social causes. The Sundance Film Festival has brought greater attention to a number of independent films over the years, such as Little Miss Sunshine, Clerks, and sex, lies and videotape. The Sundance Channel, an outgrowth of the institute, shows uncut independent movies and original programming.

Cablevision will finance part of the deal with General Electric (NYSE: GE) stock it acquired when NBC bought the Bravo channel from it in 2002. NBC, which owns 57% of the Sundance Channel, will get the GE shares, while CBS -- a 37% owner of the channel -- and Redford will receive cash.

Perhaps adding another source for movies is an attempt to make Cablevision a more compelling choice, considering the competition. It's not enough for some investors, though, like CAPS All-Star TMFDeej. This CAPS player views the threat from Verizon (NYSE: VZ) as a serious one and has a less-than-rosy opinion of management at the cable company. "I love the whole idea of cable companies being able to add to increase their earnings by offering Triple Play packages, but competition from telephone companies like Verizon, etc. is coming on fast. Add this increased competition to the fact that Cablevision has an absolutely TERRIBLE CEO in James Dolan and this is good enough for a CAPS short for me."

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 -- or whether you think it's better for the companies involved to remain independent.

Heartland Payment is a Motley Fool Hidden Gems newsletter pick. You can take a free trial 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. The Motley Fool has a disclosure policy.