Birmingham stockbroker Arden Partners has confirmed that merger discussions with London rival firm Cenkos Securities have been broken off.
But the Edgbaston-based broker indicated that it has other potential merger partners in the pipeline.
The firm did not say why the merger discussions, started in early May, came to an end.
In a statement, the firm said it has had "preliminary approaches from other parties which may or may not lead to an offer being made for the company."
Arden Partners, which listed on AIM in 2006, offers agency broking services as well as corporate finance advice to small and mid cap companies.
In 2007 the group worked on deals worth over £450 million, raising over £190 million in capital for its clients.
Its clients have a combined market capitalisation of around £4.5 billion. Most of the team at Arden Partners worked together at Albert E Sharp Securities and then at Old Mutual Securities, following its takeover of the Birmingham-based broker in 1998.
At the company's annual general meeting in April, chairman Sir David Rowe-Ham told shareholders that market conditions in the UK small and mid market were challenging in the first half of Arden's year and corporate income was down by 20 per cent.
But commission and trading income were in line with the corresponding period last year.
Sir David said Arden Partners was well placed to weather current difficulties and that the company's Indian business would create new opportunities.
Cenkos Securities, based in the City of London, offers broking and corporate finance services and recently acted for 'hedge fund of funds' Thames River Hedge plus in its recent placing raising £82.3 million.