Why buyers price against it
A buyer is acquiring a working system, and they need to believe the system keeps working after the people who built it move on. Documented process is the evidence. When operations are written down, the company owns its own know-how and can hand it over. When they are not, the buyer is really buying a group of individuals and hoping they stay, which is a far riskier thing to pay for.
What weak looks like
Critical tasks only one person knows how to do. Onboarding that happens by sitting next to someone for a month. Quality that depends on who happens to be doing the work. Answers to how something is done that begin with the name of an employee rather than a process. In diligence, this reads as key-person risk spread across the whole operation, and it makes every other strength look more fragile.
How to strengthen it
Begin with the processes the business could not run without, then the ones that live in a single head. Write them so a competent newcomer could follow them without you in the room. Keep them practical and current rather than exhaustive and stale. The aim is legibility: a buyer, or a new manager, should be able to read how the business works and see that it will keep working when the founders are gone.