The future of Doherty Advertising remains uncertain, after a potential takeover by a rival company fell through.

In a statement, the Larkin Partnership said, after completing due diligence on Doherty, it was not proceeding with the deal. No further explanation was offered.

However, it is understood several media companies are owed monies by Doherty and, in recent days, attempts have been made to address this matter. While some agreement was reached, concerns remain over monies owed to Doherty itself.

Despite this, Doherty managing director Mr Mark Beggs said he remained convinced the company had a future and talks were ongoing with two other interested parties.

"Obviously, we are disappointed it is not going ahead with Larkin, but it is just one of three deals we are pursuing," he said.

He said the talks were progressing with the two unnamed agencies and there was also the possibility of a separate equity injection by Japanese advertising house Hakuhodo.

Mr Beggs claimed his company lost almost €300,000 after the closure of the Dublin Evening newspaper.

"That has hit us hard, as it would any company in the advertising business," he said.

He added that, despite the problems and the withdrawal of Larkin, the agency had 160 active clients, which should prove attractive to other advertisers. The company chairman is Mr Paschal Taggart.

Doherty has several high-profile clients but its biggest strength in recent years has been getting business from health boards. It also holds accounts for retailer Shaws, accountancy software firm Sage and Air Canada. It also offers a public relations service to clients.

Before its recent difficulties, the company's profits were under pressure, according to accounts with the Companies Office. In the year to April 2002, pre-tax profits fell to €534,618 from €797,753 the year before. However, it did have retained profits of €1.3 million to April 2002.

Mr Beggs said the company was still winning business and recently secured the account for Sharp mobile phones in Ireland.

Mr Beggs said while the Larkin news was disappointing, the deal was always going to be a difficult one and some Doherty clients were reluctant to shift their business into the new arrangements.

"The two companies are very different. We are a full-service agency, offering all the services ourselves, while Larkin outsources a lot of their work, so there was always going to be a challenge to match the two businesses," he said.

The Larkin Partnership, in a statement, said it would continue to pursue opportunities in the advertising market with a view to building a larger independent advertising business.