When we started writing this blog, a friend challenged us: “So, what strategies will work? You tell me about all these ideas that aren’t going to pan out. What deals do you like?”

We actually like a lot of deals. We’ll start today with the Waste Management proposal to buy Republic Services for $6.73 billion.

When we evaluate a strategy, we look to see if it raises any of the red flags that were associated with the 750 failures we evaluated for our book, and the Waste Management deal raises few, if any. The absence of those red flags means the takeover idea has no inherent flaws. (There is still, of course, a matter of execution.)

Often, when companies make an acquisition to consolidate a maturing industry they wind up buying a company that has problems—as an industry matures, margins shrink and everyone faces pressure. In this case, though, Republic is known as the best-managed trash hauler in the country.

Sometimes, companies make an acquisition to achieve critical mass and are disappointed to find that they are still such a small player that they don’t get much additional pricing power, purchasing power and so on. But the combination of Waste Management, the biggest company in the industry, and Republic, the third-largest, would be a behemoth. The New York Times says the companies would, for instance, control half the permitted landfill capacity in the U.S. So, the additional scale could provide benefits.

Companies often find that scale doesn’t provide the expected cost-cutting opportunities because the business being acquired is just enough different from the one doing the buying that there isn’t as much overlap in operations as expected. But Waste Management and Republic are in precisely the same business, meaning Waste Management has a chance to achieve its expected $200 million in annual savings by combining the businesses.

Acquisitions in the name of consolidation can also be difficult because companies in a maturing industry tend to be bigger. The sheer size makes them hard to digest. In addition, the acquirer is often inexperienced at doing big deals, and it makes mistakes. But Waste Management has a long history of big takeovers. It should make fewer errors than the norm.

There are three potential areas of concern:

–The main one is that the deal is being thrown together quickly, in response to Republic’s deal to acquire Allied Waste Industries, the second-largest company in the industry. The haste could lead Waste Management to overlook some potential problems.

–Research suggests that acquisitions are more likely to succeed if the better-managed company is buying the weaker company, because then the acquirer will improve the target’s performance. That Republic is regarded as better managed than Waste Management suggests that some of its effectiveness may disappear as Waste Management’s managers and practices take over. Still, Waste Management isn’t operating from a position of extreme weakness, as many companies were in our major failure cases, and it’s a well-run company, so any loss of efficiency could be minimal.

–Waste Management has already raised its offer once, suggesting the company may suffer from deal fever and pay too high a price because it is determined to win at any cost. But the latest offer is just slightly more than 20% above the price where Republic traded in late June, right before it announced the deal to buy Allied and saw its stock price slide some 10%. That 20%-plus premium doesn’t seem to be irretrievable.

Okay, there’s one other thing we don’t like about the situation: As the Times piece shows, Waste Management is being referred to as “Waste.” “Waste Management” is an odd enough name, but at least it’s descriptive. Who wants to be known as “Waste”?