Ugh there's so much circumstance and context I would have to preface with, but in the end when we decided we couldn't work together anymore (after almost 3 years), we came up with 2 options:

Either one of us buys the other out, or we dissolve the business. He chose to buy me out and attempt to keep going, but the company folded less than a year after I left.

It wasn't quite a messy as this situation seems to be, but it was rough, as both of us had basically put everything we had into the business.

2-person startups are kind of platonic marriages, and as such splitting up is basically getting a divorce (at least in terms of mental stress).

edit: to answer your "what would I do differently" question, absolutely insist on getting a lawyer up front to draft all the paperwork and employment agreements (we didn't do this because it seemed so expensive).