(Reuters) - Cerberus Capital Management LP and Sycamore Partners are the two private equity firms actively exploring an acquisition of Staples Inc SPLS.O, the U.S. office supplies retailer, people familiar with the matter said on Tuesday.

FILE PHOTO: A shopping cart is seen outside a Staples office supplies store in the Chicago suburb of Glenview, Illinois, February 4, 2015. REUTERS/Jim Young/File Photo

Staples has held talks with several private equity firms over the last few weeks about a potential deal, the sources said. Cerberus and Sycamore have emerged as the frontrunners, as other prospective buyers have become discouraged by the challenges Staples faces in shifting its business model from serving consumers to catering to companies, the sources added.

Clayton Dubilier & Rice LLC , Advent International Corp and Bain Capital LLC are among the private equity firms that have also held discussions with Staples but are now less actively pursuing a deal, according to the sources.

A major hurdle for private equity firms in putting together an acquisition plan is foreseeing how they can successfully cash out on their investment a few years down the line, the sources said.

While Staples has sufficient cash flow to support a leveraged buyout, many firms struggle to see how they can take the company public or divest it at a significantly higher valuation than what they will pay for it, the sources added.

Private equity firms are also troubled by the divergent fortunes of its successful wholesale business and its laggard retail business, according to the sources. Staples still carries the cost burden of 1,255 stores in the United States and 304 stores in Canada. It recently announced plans to sell roughly 60 stores in North America.

Staples is continuing to explore a sale, and there is no certainty it will clinch a deal with either Cerberus or Sycamore Partners, the sources said, who asked not to be identified because the deliberations are confidential.

Staples, Cerberus, Sycamore Partners, Clayton Dubilier, Advent and Bain all declined to comment.

Staples, which made its name selling paper, pens and other supplies in retail stores, has seen the value of its stock stagnate after its previous agreement to merge with peer Office Depot Inc ODP.O was thwarted by a judge on antitrust grounds a year ago.

Staples has the largest market share of office supply stores in the United States at 48 percent, and its share has increased since 2011, according to Euromonitor.

Buyout firms have watched many of their investments in retailers sink as debt loads shackle them in the struggle with industry headwinds, including changing spending habits and the popularity of internet shopping.

A number of private equity-backed retailers, from Sports Authority Inc to Payless ShoeSource Inc, have filed for bankruptcy in the last two years.

As a result, the value of private equity-backed acquisitions of retailers worldwide fell last year to $18 billion, less than one-third of its 2007 peak, according to Thomson Reuters data.

Cerberus clinched another deal with Staples just last year, when it acquired a majority stake of Staples’ European business for 50 million euros ($53.65 million). The deal was meant to allow the retailer to focus on its North American operations.