Talks with Roberto Cavalli and Italian private equity group Clessidra have broken down after the designer refused to reduce his valuation of the fashion brand.
Cavalli and Clessidra had been in exclusive talks since the start of the year about the private equity house taking a stake in the designer.
Clessidra pulled out of talks to take a 30 per cent stake in Cavalli over the weekend, according to WWD.
Clessidra signed a letter of intent in June and the deal was expected to be sealed by the end of September. However, it is believed that Cavalli would not negotiate on his asking price or sell a larger stake for the same price.
It is unclear how much Clessidra was offering.
In July 2008, Cavalli called off an auction because of market conditions, saying valuations of his business of around €800 million (£680.4 million) to €900 million (765.4 million) fell short of his expectations.
At one point Cavalli said he believed his company was worth more than €2 billion euros (1.7bn).