The Story Of “Earth Resources” Water

by | May 26, 2021

Mel had already suffered one heart attack and undergone surgery to replace valves in his heart. His health was not the best and he knew it.

Working day-in and day-out building his business after leaving a successful career in finance was stressful. The business was in what used to be Czechoslovakia. But Mel came to this part of the world to help state-owned industries transition from communism to a new economy. “The Wall” had fallen, and Western money was looking for new opportunities in the East.

Against this backdrop, Mel saw his opportunity as an entrepreneur. The business he started was Earth Resources, based in Prague, in what is now the Czech Republic.

The business started as residential water treatment—selling in-home, under-counter water filters that were sourced from the United States and Europe. Having been in the country for a few years at this point, Mel knew the water system was not ideal, not necessarily toxic, but not ideal. There was a problem that could be solved, and people wanted the solution.

In those early days, locals were becoming aware of what the West offered and they wanted the same—clean, good-tasting water and sodas. Building on the notion that those in the East wanted what the West had, soft drink giants Coke and Pepsi were quick to enter the market. The soda machines we all take for granted at 7-11 and local McDonald’s were beginning to arrive, and the soda manufacturers quickly realized they had a problem. Without the “correct water,” both the machines and the taste of their product were in trouble—they needed the impurities filtered out of the water to meet their specifications.

Mel’s company was there ahead of the curve. Earth Resources knew how to import just the equipment Coke and Pepsi needed, and they had the human resources to install and maintain the equipment, so it just made sense for these beverage companies to begin working with Mel. Soon, Earth Resources was off and running. Operations began to grow as industries realized that better water helped the equipment last longer and required less service/maintenance.

Not much later, municipalities also saw the benefit of better water for their communities. As Earth Resources grew, another need developed. Mel was no chemist, but he knew business. Treating water correctly is a science, so Earth Resources began a chemical testing division, where water samples were tested, and the appropriate solutions and equipment could then be installed. Equipment got bigger and more complex—reverse osmosis, desalinization, etc.—and it wasn’t long before Earth Resources had grown well beyond the market for under-counter residential filters from which it began.

Remember—all this growth is happening in the years following Mel’s heart attack. Without letting on too much, Mel began considering his exit from the company. He began by creating his list of potential buyers, one of which was his filter supplier.

Negotiations began well, as Earth Resources was a major player in the region, having expanded beyond the Czech Republic into more Eastern-block countries. The company was generating over 7 figures annually in revenue, and the business model was built on steady recurring revenue. Although water filters could be considered a commodity, Earth Resources was able to differentiate because they had exclusive access to specific technology that set the product apart from the competition, in addition to the chemical testing/analytical division.

Cash flow was also positive, and customers would preorder and prepay before shipments were requisitioned from the United States. Mel also had built a great management team to run daily operations at this point, so the business able to thrive without him. They had a diversified customer base and staff that were well-trained across areas of responsibility.

As negotiations continued, things started to become contentious. The potential buyer began renegotiating terms that did not sit well with Mel, and eventually, the talks broke down. At this point Mel had stepped away from the business, was back in the USA and was acting as the President and CEO of the company he had built, letting the local management team run operations. However, he was still looking toward an exit.

With semi-annual trips back to Prague, Mel stayed in the game but knew his health was getting worse. He knew he had built a great business, so what about selling to the management team?

After some back-and-forth, that’s exactly what happened. Mel was able to successfully exit without regrets.

This story has a lot of meaning for me because, well, Mel is my father. My dad’s success as an entrepreneur and his successful exit are what inspired me to build my business and do what I do.

The story ends a few years after my father’s exit from his business; unfortunately, while out to dinner with my mother and neighborhood friends, he had another heart attack, and this one took him from us in September of 2014.

What inspires me the most about this story is the fact that my father was able to leave a financial legacy that has provided for the family since his passing. My mother is able to live without financial worries in the house they “retired” in together on the waters of the Chesapeake Bay, on Maryland’s Eastern Shore.

Crossing the Goal Partners has a mission to support every owner in the successful exit from their business, so they leave a similar financial legacy for their family’s secure future.

And, yes, Earth Resources continues operations in Eastern Europe today under the ownership of the management team!