Private equity (PE) leveraged buyouts (LBOs) are financial transactions through which an acquirer (i.e., a PE fund) buys a controlling stake in a company using a substantial amount of debt, with the objective of selling it after a few years for a profit (Kaplan & Strömberg, 2009; Wright et al., 2009). The objective of this chapter is to illustrate how LBOs affect innovative activity at target companies. Specifically, the aim is threefold: first, I want to illustrate how the effect of LBOs on innovative activity can be described using two complementary theories, and how these theories reflect the characteristics of different LBO waves. Second, I want to discuss how the literature has focused mostly on technological innovation, paying relatively less attention to managerial innovation. Third, I want to illustrate some possible avenues for future research on this topic.