Paulo Sergio last night left Hearts after rejecting the offer of a new contract.
The Clydesdale Bank Premier League club confirmed that talks over a new deal had broken down with the 44-year-old Portuguese.
A Hearts statement read: "Heart of Midlothian FC announces that it has started the search for a new manager after Paulo Sergio did not agree to the terms proposed t o him by the club. The club had been hopeful recent negotiations with Sergio would have a successful conclusion but he has opted not to extend his stay at Tynecastle. The club has now commenced the process of putting a new coaching team in place which is capable of building on the success of the William Hill Scottish Cup victory over Hibs."
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