The deal is said to have caused friction between Grey and its sister media network, MediaCom.
The agreement is also said to have been weakened by the departure last month of Garry Lace, Grey's chief executive. Lace had championed Grey's investment in the communications strategy specialist.
He is understood to have wanted to take a significant minority share in the agency, although no deal was ever signed.
However, Naked Ambition will now go it alone as a spin-off from Naked.
The operation was set up last November to handle conflict business and to help the original Naked agency retain a small-agency culture.
The spin-off started life in Grey's Great Portland Street offices. However, it has recently moved into its own premises in Covent Garden. It shared Grey's Air Miles and AOL clients.
Matt James, who quit Mediaedge:cia to run Naked Ambition last November, said the agency would continue to work with Grey on some clients.
However, he will also seek alternative above-the-line agency partnerships.
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