You can't expect to take a fish out of one pond and expect it to function in a same way, in a different pond.
There would appear to be a conflict or difference of expectations. As much as you don't like it (although this employee would appear to have made certain things clear), maybe you will have to change your ways to suit this employee. But then, if that's not how you operate, it would be time to part ways. You can probably bet that if they're unhappy, they're already looking for a new job.
So you've to ask yourself how much you want to hang on to this person. If you're willing to listen to their ideas and expectations with a view to fulfilling some or all of them then do it. Otherwise, be prepared to lose this person or, at least, don't depend on them being around for too long. Both ClubMan and Janet suggest that maybe the problem isn't with the employee but with how you run things. Think about it. This employee was highly regard. This would have come about because of the environment they worked in. If you expect that kind of performance from them then prepare to replicate that environment.
At the same time, if making them happy results in you losing what you have, you've got to weigh it all up.