Keystone Capital Inc., owned by Chicago investor Kent Dauten, has agreed to buy Cherry Hill Photo, a Marlton-based company that supplies more than 500 "naturally-bearded Santa Clauses" to malls at King of Prussia, Willow Grove and more than 300 more locations across the U.S. and Canada, from Philadelphia-based Eureka Growth Capital Management LP.  They won't say for how much.

"These are naturally-bearded Santas. You can't have a fake-bearded Santa at a mall. A three-year-old will pick that up pretty quickly," says Michael Mufson, whose colleague Peter Hill, a fellow managing director at Center City-based investment bank Mufson Howe Hunter & Co. LLC, led the team advising Cherry Hill on the sale.

Cherry Hill charges $20 to $75 for Santa photo sessions and arranges million-dollar-plus winter-wonderland-type photo settings, complete with trains, giant snow-globes or other props, employing themes like C.S. Lewis' 'Narnia' stories, Disney's 'Frozen' and Charlie Brown's dog Snoopy to draw families seeking mementos.

"You only work six weeks a year, you need to make a lot of money" to cover costs, Mufson said. The firm also sets up Easter Bunny photo sites. (Cherry Hill Photo is unrelated to Noerr Management, which manages Santa displays at Cherry Hill Mall and some others owned by Philadelphia-based PREIT.)

Buyer Dauten told me he likes the "niche" nature of the Santa business, and plans no changes to operations under chief executive Ed Warchol. Mufson Howe and lawyers at Morgan, Lewis & Bockius advised both Cherry Hill and seller Eureka in the sale. (Corrected)

The firm was founded by Cherry Hill photographer Alan Wechsler in 1961 (he was Jewish, and enjoyed an ecumenical outlook). Since Eureka bought the firm in the late 2000s, it has introduced digital content equipment and products and boosted profits, Eureka managing partner Chris Hanssens said. "Eureka brought the resources to allow us to expand," added Cherry Hill's Warchol.

How they divide the work: "The mall takes on the capital expenditure. Cherry Hill does the infrastructructure, stafing, point-of-sale (credit card), photo equipment," said Mufson director David Achey.

Cherry Hill Photo is typical of the labor-intensive "niche-y business" mergers-and-acquisitions assignments Mufson Howe focuses on, said Mufson.

For example, fellow managing director Anthony Lopez-Ona last winter advised York Wall Coverings' former owner, Carl Vizzi, on the sale of the 250-worker, 119-year-old, high-end wallpaper manufacturer and its plants in downtown and suburban York to High Road Capital.

"Though they have among the most state-of-the-art productoin equipment," the company also has antique, irreplaceable, British-built 125-year-old machines that give premium finishes, Lopez-Ona told me. "It's high-end wallpaper. They call it 'surface printing.' You can feel the ridges on it. They sell to high-end designers."