Decide what you want. Do you want to do battle or let the company die?
You can fire these guys, hire some new staff, and get on the phone with every client, customer, supplier, and relationship you have and close them again.
Or
You can have a frank conversation with your staff and let them buy you out. You may even be able to do seller financing, but that may be a bad idea if you don’t have faith in them or trust them.
The question is, what is your buissnes really worth? What is the breakdown of equipment and IP vs, just the client list?
I agree. If you become friends, in ten years you may buy him or he may buy you, or one of you may decide entrepreneurship is not for you and you can get a job from the other.