LandAmerica’s experience is the latest example of how dismal the M&A market has become in financial services as potential suitors worry about buying someone else’s troubles.

The title insurer, weakened by the U.S. housing slump, started its search for a buyer some two months ago.

But despite hiring JPMorgan and Wachtell Lipton, setting up a data room and approaching a range of potential suitors - a large shareholder, rivals and private equity firms - it could not survive.

The unidentified shareholder, whom the company initially approached for a capital injection or acquisition, was uncomfortable with its potential liquidity needs.

Fidelity National ultimately emerged as the only suitor able to complete a deal quickly and a merger agreement was announced on Nov. 7. But within two weeks Fidelity wanted to back out as well.

Fidelity reached a new deal to buy the insurer’s largest underwriting businesses, while LandAmerica filed for Chapter 11 bankruptcy protection.

Fidelity agreed to pay a combined $298 million for the units. It had agreed to buy all of the company for about $126 million in stock earlier this month.

(Photo credit: Robert Galbraith, Reuters)