Exclusive: Dell talks with Quest break down: source (Reuters) - Negotiations for Dell Inc to acquire Quest Software Inc have broken off but lower-level representatives from both companies remain in touch, a source familiar with the matter said. A previous deal for Dell to buy Quest at a range $23 to $26 per share fell through last month. Dell has been seeking to diversify its business away from personal computer hardware. Talks on the all-cash offer had been tenuous between the two companies, said the source, who did not elaborate on the reason for the break-off. Quest had agreed in March to be acquired by Insight Venture Partners for $2 billion, or $23 a share, and taken private. But the Aliso Viejo, California-based company said it received multiple offers during a so-called go-shop period after the Insight deal was announced, raising questions whether Insight Venture's bid would be successful. Insight Venture Partners has the right to match rival offers. Dell and Quest declined to comment on Friday. Insight Venture Partners could not immediately be reached. For any deal to be accepted by Quest, a special committee in the company has to determine that the rival offer was superior to the Insight Venture offer. Any deal with Quest is also fraught with complications as roughly 34 percent of Quest is owned by Chairman and Chief Executive Vinny Smith, who took over in February after Doug Garn stepped down, citing poor health. At least four shareholders have filed lawsuits after the deal with Insight Venture was announced in March, arguing the deal undervalued Quest. Such lawsuits are typical after merger deals. One lawsuit alleges that Quest's CEO, Smith, rushed to sell the company to head off a possible regulatory probe into accounting practices. Quest's board has retained advisers, including the investment bank Morgan Stanley, to review all offers. If Quest terminates the deal with Insight, it will pay the private equity firm a breakup fee of either $4.2 million or $6.3 million, depending on the timing of the deal. Reporting By Poornima Gupta in San Francisco and Nadia Damouni in New York; editing by Matthew Lewis