Creating a water transition in After Effects for Text

You just have to start playing around. If you start with Turbulent displace you can start bending the image. Add Fast Blur and Simple Choker with a negative value and you can change the thickness of the text. Add Bevil Alpha to make it look like surface tension is adding some depth. You can turn simple text into this in a couple of minutes. 

There are a lot more ways to distort an image in the distort section. The hardest part is going to be getting the two text layers to look like they merge into each other.  You might be able to overcome that by creating a simple transition between two text layers, then pre-composing the two of them and adding the displacement to the pre-comp. Something like this:

The screenshot shows you all of the properties I changed and animated. Here's a project file for you to play with.

To make this look realistic you'll need Trapcode Form or Tao, or Particular or Mir, or a combination of some of them. That's the workflow I would explore. Visit https://www.redgiant.com/tutorials/ and check out the Trapcode Suite. There are a least a couple of tutorials there that will help you create that kind of transition.

If all you don't have the Trapcode suite or the budget then you'll have to use a combination of the built-in effects to distort and displace one layer and then fade it into a time-reversed or action reversed second layer.