The intervening years have not been kind. Martha Stewart Living was valued at just $209 at yesterday’s market open, thanks to expanding quarterly losses, negative EBITDA and less than $23 million in the bank. So it did what any desperate company does: It put itself up for sale.

Not officially, of course, but in the coded parlance of Wall Street. Martha Stewart Living said that it had hired The Blackstone Group’s (BX) advisory arm to “explore” various opportunities. This includes responding to “various parties that have expressed interest in potentially partnering with or investing in the company,” although one media banker I spoke with called it a smoke screen.

“It’s a classic case of trying to drum up investors,” he said. “If there really was significant inbound interest, then you probably don’t do a press release.”

This isn’t to say, however, that suitors won’t soon be knocking. I spoke to several private equity firms today that said they are not yet engaged on the deal, but plan to take at least a cursory look after the Memorial Day weekend.

“It’s not a turnaround in the way most of us think about turnarounds, but it does appear to be batting below its weight,” said one West Coast private equity executive. “Its revenue is essentially the same as its market cap.”

The universe of prospective buyers is actually pretty large, given that both mid-market and large-market buyout firms could handle the equity load. Interested parties would have to be comfortable with both the media and merchandising space (nearly 20% of MSO revenue in Q1 2011), but that’s a small hurdle. The larger issue is Martha Stewart herself.

As part of yesterday’s announcement, Stewart said that she would rejoin the company board in once her SEC ban expires later this year. This is largely a formality — Stewart is widely believed to call the company’s important shots — but how would a private equity owner handle her long-term? Would it continue the company’s strategy of putting Stewart out front, believing that the person is the brand? Or would it decide that her personal popularity has waned, but that the brand itself can be reinvigorated without a flesh-and-blood mascot?

Strategic acquirers also would have to answer the “Martha question,” albeit in a different way. Specifically, would she be comfortable working for someone else. And, if so, how long would she be willing to do so? Would she require an Arianna Huffington-type deal, where she basically gets to reinvent another company in her own image?

My guess, and it’s only that, is that Stewart will seek out a private equity suitor that offers her something similar to what Playboy founder Hugh Hefner recently got from Michigan-based investment firm Rizvi Traverse. The only major difference may be that Stewart makes sure the sponsor has significant new media expertise, or at least ideas on how it can avoid missing out on the next e-commerce trend (e.g., flash sales).

“Private equity makes sense if you assume that the company is interested in a large-scale reinvention,” says Dave Niles, president of business consultancy SSA & Co. “They clearly need to make some pretty significant changes to their core operations, resolve what Martha means for brand presence and expand more internationally. Private equity is well-positioned to help with those things.”