The chain-restaurant marketplace was transformed in 2006 and 2007 by a flurry of merger and acquisition (M&A) activity. Dozens of privately and publicly held chains were snapped up by private-equity firms (such as Sun Capital Partners’ acquisition of Boston Market) or purchased by other restaurant operators (such as Darden Restaurants’ acquisition of Rare Hospitality International).

Research by Milwaukee-based investment banker Robert W. Baird found M&A activity to be at a notably slower pace in 2008.

That led R&I to ask Christopher Sciortino, director of Baird’s investment banking department:

Q: Has investor interest in the restaurant business cooled or have the most desirable restaurant-chain companies already been acquired?

A: What you’re seeing is a slowdown in the overall M&A market. Broadly speaking, there now is a much more challenging financing market, and that market was a big contributor to the level of acquisition activity seen in the past few years.

Lenders are being much more conservative, and on top of that, the consumer-spending environment certainly has been tough. There continues to be the view [in financial markets] that there is a significant correlation between consumer spending at restaurants and gasoline prices, which have been at very high levels.

That said, I think there’s still capital left [for acquisitions] and that there still are chains out there that are very attractive and that could be candidates for sale [in the near future]. In any market, there are investors looking for opportunities. Potential acquirers are going to be focusing on the quality of a business, but they are going to be more selective.