Firms increasingly use acquisitions and divestitures to acquire strategic assets such as technological know-how and technological capabilities that can contribute to their innovation potential. This study investigates whether firms combining acquisitions and divestitures have been more innovative than those that did not. It uses an empirical model to examine the relationship between acquisitions and/or divestitures, on the one hand, and the probability of firms to produce innovations, on the other hand. Innovations are distinguished according to products and/or processes that are new to the firm as a proxy for all innovations including imitations and those that are new to the market which is a proxy for so-called real innovations, excluding imitations. In order to test the model a data set is used that includes 2381 firms and was derived from the Dutch Community Innovation Survey (CIS-2) survey for the years 1994–1996. The estimation results show that divestitures in the services industry affect the probability to innovate positively in case of innovations that are new to the firm. In the manufacturing industry, a stable and positive correlation was found between acquisitions and/or divestitures on the hand, and real innovation activities of firms on the other hand.