Private equity firms gear up for a bid for Reed Business Information

The roots of Reed Elsevier go back to the late 1800s. And since then, it has become a publishing empire. And a big part of the growth has come from M&A.

Well, now the company is engaged in another key deal. That is, Reed Elsevier is engaged in an auction to sell its Reed Business Information (RBI) division.

It's an attractive asset. For example, RBI has such publications like Variety and New Scientist. In all, there are about 80 publications and annual revenues come to about $2 billion.

As a result, a group of private equity firms are lining up to get the deal. These include 3i Group plc, Apax PartnersWorldwideLLP, Bain,TPG, Candover, Cinven, Permira, Advent International and Providence Equity Partners.

Now, RBI's goal is to get $2 billion to $2.5 billion. However, in light of the tough economic situation, this could be optimistic. Keep in mind that RBI may provide some financing help to potential buyers.

Then again, there may be a way to get a stronger valuation: it looks like The McGraw Hill Companies (NYSE: MHP) is interested. All in all, RBI would be a nice fit for the firm, with some revenue and cost synergies.