Nanette Lepore is moving closer to a final decision on an investor, possibly within the next month or two, financial sources said.

This story first appeared in the July 29, 2013 issue of WWD. Subscribe Today.

These individuals said Lepore and her husband, Robert Savage, chief executive officer of Nanette Lepore, are in discussions with several potential investors. Additional discussions and meetings with these investors are taking place this week, according to a source familiar with the talks.

One of those in negotiations with Lepore is Bluestar Alliance, a brand management firm, according to several financial sources.

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These contacts said Bluestar last month made an offer to acquire outright the intellectual property of the brand, with Lepore taking ownership of the license and the running of the day-to-day operations. They also said the offer was rejected by the fashion firm. Talks are still ongoing between Bluestar and Lepore, although this time for a lesser stake in the firm.

Sources emphasized that Lepore is seeking an investor who can partner with her and Savage to grow the business, not for the couple to exit the firm or the fashion industry. Credit sources said Lepore has a well-respected brand, and the business has good cash flow.

Neither Lepore nor Joseph Gabbay, the cofounder of Bluestar, could be reached for comment.

Market sources said one key issue with a brand management firm is how much involvement the owner still wants in the business. Brand management firms own the intellectual property of the brand, but aren’t operators. They build relationships with licensees to leverage the brand equity and expand into other categories to grow the consumer base. The former owner who takes back the license risks getting moved out of the business if minimums aren’t met. And once the IP is sold, the former owner has no say on future distribution or the direction of the brand, particularly if the IP owner then gives another licensee ownership of a new territory for distribution.

That apparently was a key stumbling point for Lepore.

Having an investor take a stake, and essentially becoming a partner, is the far better deal for both a designer and an investor. One investment banker said that brands that no longer have the designer attached to the company tend to be worth less. Having the designer’s input develops the brand and helps both sides capture the upside as the company grows, this banker said.

Bluestar, founded in 2006 by Gabbay and Ralph Gindi, has been successful in moderate midtier distribution, but is now eyeing firms higher up on the fashion food chain. Financial and market sources said Bluestar had taken a look at Catherine Malandrino, who later elected to partner with Elie Tahari and Arthur Levine. Bluestar also reached out to other designers, such as Charlotte Ronson, to see if any might be interested in pursuing talks.

Financial sources speak highly of Gabbay and Gindi, noting that they’ve done a great job building the firm from scratch. Although once believed to be limited to smaller deals since most investors they pulled in were from the Syrian and Jewish community, that perception changed when Bluestar last year joined forces with Carlyle Group, the world’s second-biggest private equity firm, to bid for bankrupt men’s firm HMX Group. It lost to another brand management firm, Authentic Brands Group. Bluestar’s umbrella of brands includes English Laundry, Kooba, Kensie, Mac & Jac and Harvé Benard. It also once owned a stake in Liz Lange Maternity, sold in 2012 to Cherokee Inc., and Ron Chereskin Studio, sold in 2010 to J.E.M. International Inc.

Lepore started the business with a $5,000 loan from her father and now has 11 stores, including outposts in New York, Los Angeles, London, Shanghai and Tokyo. The designer also has a line at J.C. Penney, L’amour Nanette Lepore.

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